French PM pledges austerity plan to beat debt crisis

24th November 2010, Comments 0 comments

France's newly re-appointed prime minister vowed Wednesday to defeat the debt crisis stalking Europe by pushing on with deficit cutting austerity measures despite months of angry street protests.

Presenting his programme to parliament one week after President Nicolas Sarkozy asked him to remain in charge of a reshuffled cabinet, Prime Minister Francois Fillon said France must get its public deficit under control.

"With a debt of 1,600 billion euros, France has no hidden treasure that could allow us to dispense with this effort," he warned, referring to France's accumulated government debt, equivalent today to 2.1 trillion dollars.

Sarkozy's previous economic reforms -- in particular this month's vote to increase the minimum pension age -- provoked widespread public anger and drew hundreds of thousands into the streets for a series of protest rallies.

But -- as beleaguered fellow eurozone member Ireland unveiled dramatic cuts, and with Portugal and Spain nervously eyeing bond markets -- Fillon said only budget cuts could protect France from seeing its own debt costs spiral.

"Because the world economy must be better regulated, because our economy should be more competitive, because we should protect jobs, reduce deficits and look after the elderly, I tell you: we will continue reform," he said.

A surprise victor of last week's long-awaited reshuffle, the conservative premier returned as head of a streamlined and more right-wing cabinet team with a determined defence of his three-year-old track record.

"Why should we blush?" he demanded. "Because we reformed the universities and pensions? Because we re-balanced our institutions, imposed minimum service during strikes, halted the slide into criminality?"

Facing down angry taunts from the left-wing opposition, Fillon declared that Sarkozy and his government had "successfully faced down the worst series of disasters that the capitalist system can produce."

Fillon forecast France's growth rate in 2010 would be "greater than 1.5 percent" and would accelerate next year as Sarkozy's programme of liberal economic reform generates more "oxygen" for a private sector recovery.

Since he was elected in 2007, Sarkozy's economic reforms -- in particular the recent vote to raise the retirement age -- have faced mounting resistance, culminating in recent months in a series of massive street protests.

France is running a record public deficit of 7.7 percent of GDP. Fillon repeated his promise to cut it to six percent next year and back to the three percent maximum that is permitted by European treaties by 2013.

With unemployment and deficits surging in the wake of the global financial crisis that erupted in 2008, the president's personal popularity rating has touched historic lows, damaging his hopes of re-election in 2012.

The Socialist opposition mocked Fillon's project.

"You present yourself today as having a second wind, as the master of a new forward momentum, but in succeeding yourself, you're more than anything the incarnation of three years of failure," lawmaker Francois Brottes said.

Last week's reshuffle had been billed as an opportunity for Sarkozy to renew and rebrand his government with a view to launching his presidential campaign, but the result was a limited affair that confirmed Fillon's role.

Fillon has long been a proponent of spending cuts, having declared France "bankrupt" even before the recent financial crisis, and his reappointment was widely seen as a sign that France was heading for a tight spending round.

The premier told parliament that the tax code would be reformed to improve France's competitive position with regards to Germany, but that the total tax burden would not rise -- with all savings to come from spending cuts.

© 2010 AFP

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