France sticks by 2.5 pct growth target

8th February 2005, Comments 0 comments

PARIS, Feb 8 (AFP) - France targeted growth of 2.5 percent for 2005 on Tuesday, saying output might have grown by 2.4 percent last year, and laid out a 30-month plan to part-privatise energy giants and woo middle-class voters.

PARIS, Feb 8 (AFP) - France targeted growth of 2.5 percent for 2005 on Tuesday, saying output might have grown by 2.4 percent last year, and laid out a 30-month plan to part-privatise energy giants and woo middle-class voters.

"For too long we have not had any genuine confidence in the future. For the first time in centuries, parents fear for the future of their children," Economy and Finance Minister Herve Gaymard said.

He also insisted that France had to cut structural overspending, promising to respect eurozone limits this year.

Laying out his programme two months after taking office and two and half years before a presidential election, Gaymard said at a news conference that, provided economic conditions were appropriate, he intended to float parts of the state-controlled energy giants.

He said that slices of Gaz de France, nuclear power giant Areva and Electricite de France would be floated on the stock market this year and in that order.

The government had already indicated that it would sell up to 30 percent of EDF and GDF, and is expected to sell 35-40 percent of Areva. The opening of these groups to private capital has long been expected and prepared, but remains nevertheless highly controversial.

The government intended to push on with easing the burden of income tax and would open the way for banks to pay interest on current accounts, a change required by a European Union court ruling.

Gaymard sent out many signals to the middle class and other categories, for example in announcing plans to change home-loan laws so that money borrowed could be used for consumption or even to augment pensions.

The momentum of the French economy has been kept going in the last two years largely with efforts to support consumption in the face of EU pressure for resources to go into deficit and debt reduction.

He said that the government stood by a target of 2.5 percent economic growth this year.

"I am holding the course for growth of 2.5 percent this year, even if we all know about the uncertainties arising from the international environment," Gaymard said.

However, analysts generally foresee 2005 growth of 1.8 percent.

Gaymard said the latest growth estimate for 2004 was 2.4 percent, an "excellent" result, commenting: "Growth was good last year compared with growth in the rest of the eurozone."

"But I am not satisfied when potential for growth is constrained by an invisible ceiling owing to our inability to face up to things and to deal with a certain number of structural obstacles in our economy," he added.

Gaymard, referring to a structurally high unemployment rate of about 10 percent, said that job creation was the government's priority to restore confidence and raise consumer spending.

In his first news conference since succeeding Nicolas Sarkozy in the post in late November, Gaymard said that France would honour a promise to reduce the public deficit to the European Union limit of 3.0 percent of output.

"The need to bring our public accounts under control is not an accounting obsession imposed by Europe. It is simply good sense," Gaymard said, adding that France's public debt now stood at 65 percent of GDP, compared with just22 percent in 1981.

President Jacques Chirac won power with a controversial promise to slash income tax by 30 percent over five years, a commitment which has stalled. Gaymard said this "remains an objective", subject to growth.

© AFP

Subject: French News

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