France trims growth, worries about cost of debt

21st June 2005, Comments 0 comments

PARIS, June 21 (AFP) - France cut its 2005 growth target to 2.0 percent on Tuesday, and Finance Minister Thierry Breton said that the country was living beyond its means on debt.

PARIS, June 21 (AFP) - France cut its 2005 growth target to 2.0 percent on Tuesday, and Finance Minister Thierry Breton said that the country was living beyond its means on debt.

The minister, presenting the economic policy of the new government created after the electorate rejected the European Constitution, said the economy was heading for growth this year of about 2.0 percent instead of the 2.0-2.5 percent targeted earlier.

And, in what might be seen as a change in emphasis from the argument that growth creates jobs, he said that work created growth and that people must work more throughout their lives to increase growth and finance their social services.

France is judged to have among the shortest annual working hours among industrialised countries, although the current centre-right government has relaxed slightly the constraints of a 35-hour working week introduced by its Socialist predecessor as a measure against unemployment.

Breton also confronted head-on some key aspects of French thinking about work and the socio-economic framework.

"Some ideas which we grew up with are not only not modern but run counter to the course of history," he said.

Apparently referring to laws restraining pensioners from working and a common view that a pensioner in work is taking a job from someone else, Breton said that France had one of the lowest rates of people aged over 54 and also 65 in employment. It was vital to allow those who wanted to work longer to do so. "Similarly, the addition of a job and a pension is a necessity, we have to be able to talk about this openly".

He also said that French people should be motivated to move residence to work. "In 2000, nearly 90 percent of French people lived in the same place as 10 years earlier. This rate exceeds 90 percent in regions where unemployment is very high."

The finance ministry estimated that about 500,000 jobs were unfilled in France and that many jobs were available in some regions in tourism, catering and the construction and service industries.

In order to "change mentalities" the government was looking at ways of helping workers to understand that they had to "look for work where it is to be found", as had been usual in the 20th century.

The government, re-drawn after the 'no' in the referendum, and reeling from the setback and from signals that the electorate is unhappy with efforts to introduce structural reforms to the economy, has said that its policy will be aimed mainly at tackling persistently high unemployment.

But Breton also told a press conference that France was standing by its target for the public deficit to be 3.0 percent of output in 2005, and he warned that the cost of paying interest on the national debt next year would soak up the equivalent to all the money collected through income tax.

Overspending, he said, was squeezing the economy.

© AFP

Subject: French news

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