Villepin tweaks policies for improved second half

17th August 2005, Comments 0 comments

PARIS, Aug 16 (AFP) - Prime Minister Dominique de Villepin said Tuesday the French government was preparing a series of new measures aimed at spurring economic growth, adding that recent economic data show that the economy is back on a more favorable growth trend.

PARIS, Aug 16 (AFP) - Prime Minister Dominique de Villepin said Tuesday the French government was preparing a series of new measures aimed at spurring economic growth, adding that recent economic data show that the economy is back on a more favorable growth trend.

Speaking at a news conference with Finance Minister Thierry Breton, Villepin did not provide details of the program, but said it would include targeted spending of revenues generated from the government's privatization projects.

Villepin also said he would examine measures to help various sectors deal with higher oil prices, which he expected to endure.

He promised that excess revenues from taxes on oil products would be used to help those most exposed to the recent surge in oil prices, such as transport professionals or low-income households.

However, he ruled out a reintroduction of the TIPP floating tax on fuel and other oil products, a mechanism being called for by the Socialist opposition party, which would reduce taxes on oil products when prices rise. The TIPP was abolished in July 2002.

Villepin said he preferred measures that encourage job growth as opposed to increased consumption of gasoline and other "polluting products," as the government has made the fight against global warming one of its priorities.

The government will also pursue other measures to deal with high oil prices, he said, such as promoting renewable energy investments and encouraging conservation efforts.

The prime minister also called on French oil giant Total and other oil companies to build more refining capacity, saying supply limitations were the main reason behind the recent price increases.

"Our refining capacities are currently saturated and do not allow the adequate satisfaction of French demand. It is for Total and other petroleum companies, which are generating significant profits, to rapidly begin this effort which our country requires," Villepin said.

Soaring oil prices generated a 33 percent rise in Total's second-quarter net profit, to EUR 2.91 billion (US $3.59 billion), following a record year of earnings in 2004.

Breton, for his part, said the government had assumed an average oil price of US $50 per barrel next year as it prepares its 2006 budget, well above the US $36 per barrel average that was used to calculate the 2005 budget.

Nonetheless, he said: "We clearly sense, for example with new business creations, industrial production, business confidence, that all these indicators are beginning to return to green."

"So we are much more confident for the second half," he said, following weak growth so far this year. Last week, provisional figures from statistics office Insee showed the French economy grew just 0.1 percent in the second quarter.

Copyright AFP

Subject: French news, economy, economic growth, energy policy, Villepin, Breton

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