Hollande measures 'right direction' for French economy - EU

Wednesday 15 January 2014 13.04
EU says new measures will have a positive effect on growth and jobs in France
EU says new measures will have a positive effect on growth and jobs in France

Measures announced by French President Francois Hollande to cut public spending and business costs go "in the right direction" and will help the economy, the European Commission said.

The steps "are in line with recommendations we made last year, they will boost competitiveness and have a positive effect on growth and jobs in France," Commission spokesman Olivier Bailly said.  

"We share President Hollande's position that substantial savings have to be found - we are happy to see these measures going in the right direction," Bailly said.

The French economy, the euro zone's second largest, has struggled for many years, growing more slowly than its EU peers, especially Germany, with its problems blamed on too large a role for the state and a hugely costly social welfare system.

Hollande yesterday unveiled plans to cut public spending by €50 billion between 2015- and 2017 and reduce corporate payroll charges by €30 billion.

The French President said this was a "social democratic" programme to restore growth and so ensure France retained its global influence.

He insisted the cuts would allow France to maintain its much-vaunted but increasingly criticised social welfare system, while business would benefit from lower labour charges and less red tape.

Bailly said the Commission would look at the proposals in detail and take them into account when making its next economic forecasts.

There was no advance discussion with Paris ahead of the announcement, he said in reply to a question, and stressed that it is up to national governments to set specific targets.

Figures last month showed the French economy shrank 0.1% in the third quarter of 2013, falling back again after growth of 0.6% in the second three months of the year.

Other data has seen France lag behind its peers in a modest recovery from a record euro zone recession.

An EU report card in November ranked France among member states "experiencing macroeconomic imbalances which require monitoring and decisive policy action."

It cited specifically a decline in competitiveness and fall in export market share as high business costs hurt investment and jobs, coupled with rising public debt.