Minister sings upbeat tune about French economy

19th May 2006, Comments 0 comments

PARIS, May 19, 2006 (AFP) - The French economy is set for growth of 2-2.5 percent this year and privatisations will cut national debt quicker than planned, Finance Minister Thierry Breton said Friday, bringing bright news to the beleaguered government.

PARIS, May 19, 2006 (AFP) - The French economy is set for growth of 2-2.5 percent this year and privatisations will cut national debt quicker than planned, Finance Minister Thierry Breton said Friday, bringing bright news to the beleaguered government.

Breton also said that unemployment, the bête noire of successive French governments, would fall to below 9.0 percent before the end the year. The latest monthly figures put unemployment at 9.5 percent in March.

Centre-right French Prime Minister Dominique de Villepin has made fighting joblessness a priority, but modest improvements have been overshadowed by the humiliating defeat of an attempt to reform the labour market and a recent dirty tricks scandal.

Breton was speaking after official data had shown that growth of the French economy had accelerated to 0.5 percent in the first quarter from 0.3 percent in the last quarter of last year.

He said that growth "is set on an annual trend" of 2-2.5 percent, adding that expansion was being driven by consumer spending and exports.

Nevertheless, analysts reacted with disappointment to the figures for the first quarter, saying growth was a result of a recovery in the broader eurozone and was being driven, unsustainably, by consumers spending on credit.

The growth fell short of the expectations of The Bank of France, which had signalled a figure of 0.7 percent, and economists who were expecting 0.6 percent.

"Overall, French growth is mediocre," said an analyst at Exane BNP Paribas, Emmanuel Ferry, who underlined the weaknesses of the French economy, notably job creation, innovation and sustained growth.

French statistics office INSEE also downgraded its estimate for growth for 2005 to 1.2 percent from a previous 1.4 percent, marking an even greater slowdown compared with 2004 when growth had been 2.3 percent.

Speaking at a press conference, Breton again stressed his determination to tackle France's burgeoning national debt, which currently stands at 66.6 percent of gross domestic product.

"I commit myself to reducing the national debt by two points of GDP," said Breton, unveiling a more ambitious target than previously stated.

He said that the privatisation of France's motorway operators at the end of 2005, coupled with the sale of a 21-percent stake in enginering group Alstom owned by the French state would help to pay down the debt pile.

He also pointed to the forthcoming privatisation of Aéroports de Paris, saying that all three privatisation operations would raise EUR 12 billion for state coffers.

Breton claimed at the beginning of the month that France was "the economy in Europe that is progressing at the fastest pace", but recent improvements have been eclipsed by political intrigue.

News bulletins and newspapers have been full of reports that Prime Minister Villepin was part of a smear campaign intended to besmirch his political rival, Nicolas Sarkozy, by linking him with secret accounts in the Luxembourg clearing bank Clearstream.

Villepin has denied the claims, but admitted this week that the affair has been an ordeal for the government.

His government has also forced into an embarrassing climb-down over an attempt to introduce a new flexible labour contract for young people. The reform was abandoned at the beginning of April after months of street protests.

Copyright AFP

Subject: French news

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