Sarkozy struggles with French financial troubles

30th September 2008, Comments 0 comments

The EU president calls for meetings to address the global financial crisis, as French bank Dexia falls and unemployment rises.

30 September 2008
PARIS -- President Nicolas Sarkozy on Monday struggled to minimise the consequences of the global financial crisis, moving ahead with plans for a world summit and calling a meeting of French banking and insurance chiefs.
France will host a meeting of European officials to prepare a summit "in the coming weeks to establish the basis of a new international financial system", said Sarkozy, whose country holds the presidency of the European Union.
Officials from Britain, France, Germany and Italy -- the EU members of the G8 -- will meet in Paris this week to lay the groundwork, he said.
On Tuesday, the president is to meet at the Elysee presidential palace with banking and insurance company chiefs to review the health of French banks, households and businesses.
The announcements came as the Franco-Belgian bank Dexia announced an emergency board meeting after its stock fell sharply.
On Sunday, the Benelux countries stepped in to partially nationalise the banking and insurance giant Fortis, increasing fears the crisis that closed several US and British banks was spreading across Europe.
Sarkozy warned in a major address earlier in September that France would be affected by the US banking crisis.
A further sign of economic trouble came with the release Monday of jobless figures showing that 41,300 French people became unemployed in August, the biggest monthly spike since 1993, bringing the figure to 1,949,600.
The government called a crisis meeting of employment officials late Monday to discuss the figures, which increased concern over the financial crisis.
Critics accused the government of lying, saying that for months it overstated progress in economic reforms when unemployment was rising even before the financial crisis began.
French ministers also expressed confidence following the 15 September collapse of US investment giant Lehman brothers, which started the financial meltdown, saying French banks were stable.
After 15 September Sarkozy insisted the government would "guarantee the security" of the French banking system and warned he would "not accept that a single customer loses a single euro" to collapsing banks.
The right-wing president won election in May 2007 on a promise to strengthen the economy and lower unemployment -- long the nation's top concern -- to five percent.
Former Socialist prime minister Lionel Jospin said that Sarkozy and his government were "trying to shift responsibility for the failure of their economic policy on the financial crisis".
The government revealed a budget on Friday that canceled a pledge to reduce the deficit by 2012.
"We are in a quasi-recession", said presidential adviser Henri Guaino.
France is entering a "difficult period" and the government will "do everything that is necessary" to prevent the economy from falling, Guaino said.
Economy Minister Christine Lagarde said she expected 2009 to end with a jobless rate of 7.1 percent, down from 7.2 percent in the second quarter of 2008.
That figure was the lowest rate in 25 years, topping a steady decline in the unemployment rate that allowed the problem to lose importance over the past year.
Opinion polls show purchasing power replaced unemployment as the number one concern of the average French voter.

[AFP / Expatica]

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