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Home News Sarkozy gives nod to economists’ free-market growth plan

Sarkozy gives nod to economists’ free-market growth plan

Published on January 24, 2008

   PARIS, January 23, 2008 - President Nicolas Sarkozy gave the nod Wednesday to a 300-point free-market reform plan commissioned to "unleash" French growth, but vetoed several flagship measures to quell a mini-rebellion in the ruling party ranks.   Sarkozy had asked Jacques Attali, one of France's best-known economists anda former advisor to the socialist president Francois Mitterrand, to lead a43-member panel of international experts in identifying obstacles to growth.   Their final report, entitled "300 proposals to change France," proposes araft of sweeping changes, from job market deregulation to local governmentreform, life-long training, boosting Internet access, investing in greentechnologies or opening up French borders to immigration.   Presenting his conclusions to Sarkozy and half a dozen key ministers at theElysee palace, Attali said the combined effect of the reforms could add apercentage point to French economic growth by 2012.   "We believe these measures need to be implemented quickly, and we believethere is a limited window of opportunity to do so," Attali said, between theMarch municipal polls and June 2009, when France votes in European elections.   He said they would slash unemployment from 7.9 to five percent, create twomillion new jobs and cut French debt from 66 to 55 percent of gross domesticproduct -- as well as improve social mobility, ethnic diversity and evenincrease the life expectancy of France's poorest citizens.   Sarkozy said he was "essentially in agreement" with the commission'sfindings, although he stopped short of saying he would adopt them wholesale.   "Some may find your proposals frightening, I find them basically quitereasonable... Our country needs an intensive course of modernisation," "   "In a world that is changing at high speed, France has fallen behinddespite its exceptional assets," he said. "By seeking to regulate everythingin the smallest details, we have created a straight-jacket that preventsgrowth."   Sarkozy said a government seminar next month would start hammering outreform priorities and that several of the report's measures would be workedinto a draft bill on economic modernisation to be debated in the spring.   He also said the government would work hand-in-hand with the rulingright-wing UMP party, whose leader Jean-Francois Cope has warned it woulddemand a say in any future reforms.   As French voters fret about the cost of living, sluggish growth and theknock-on effect of the US economic slowdown, Sarkozy faces mounting pressureto deliver on his election promise to kickstart the economy.   His government has revised its growth forecast for 2008 to 2.0 percent, butprivate economists warn that is still too optimistic, predicting as little as1.4 to 1.6 percent expansion.   But the president was also facing loud protests from members of his UMPparty, who feared upsetting their constituents with unpopular reforms justahead of the municipal elections.   Sarkozy therefore ruled out a contested proposal to abolish France's 100departments as a tier of government, splitting their duties between largerregions and grass-roots groups of towns and villages, saying French peoplewere "attached" to the current system.   He also said no to a shake-up of rules protecting the local pharmacybusiness from full competition -- though he said he backed deregulating otherprotected sectors, such as taxis, hair dressers and legal professions.   And he vetoed a proposal that sparked fierce protests fromenvironmentalists: for the removal of a national safeguard clause restrictingsome types of research, including in biotechnology.   Sarkozy also entirely ducked the issue of immigration, on which the reportcalled for an easing of rules to respond to labour shortage, directlycontradicting his party's policy of stricter controls.   And he failed to comment specifically on one of the report's key measuresto boost employment: a cut on employers' social charges, among the highest inEurope, to be shifted in part to the VAT sales tax.