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France

Critics pound on Sarkozy's plans for French economy

Text by Ben MCPARTLAND

Latest update : 2012-01-30

French President Nicolas Sarkozy's planned economic reforms came in for criticism from both rivals and economists on Monday. The French president insists his series of proposals are vital to making France's ailing economy more competitive.

French President Nicolas Sarkozy has come under fire from his rivals for the Elysée Palace after announcing a series of reforms aimed at reviving his country’s ailing economy.

Sarkozy took to the screens of no less than six French TV channels on Sunday as he tried to seize back the initiative in the battle to convince the public he is the right man to look after the purse strings.

France will vote on April 22 in the first round of the presidential election. Sarkozy, who is yet to officially announce his candidacy, is lagging behind Socialist Party candidate François Hollande in the polls.

The latest opinion poll taken before Sunday’s speech suggests Hollande could beat Sarkozy by a margin of 10 percentage points if the two went head to head in the second round on May 6.

The two chief economic proposals Sarkozy revealed in an-hour long interview were plans to raise the normal level of VAT by 1.6 per cent to 21.2 percent and introduce a 0.1 percent "Robin Hood" financial transaction tax.

"The rise in VAT will only be implemented on October 1..."

The VAT increase would help finance an expected cut in payroll charges for employers, a measure Sarkozy believes will help French industry become more competitive.

He also wants to increase the number of young people taken on as apprentices and create a new bank to invest in French industry.

But his rivals were dismissive of the proposals.

“I think he has maybe forgotten the fact he was talking about his France – a France where nothing works and nothing is produced,” said Pierre Moscovici, who is managing  Hollande’s presidential campaign.

“It’s a France of massive unemployment. That’s what he created. Everything he is proposing is bad for employees and will lead to massive injustice,” Moscovici added.

Eva Joly, the presidential candidate for the Green Party, also had scathing words for Sarkozy after his TV performance.

“Mr Sarkozy is finishing his mandate in the same way he began it, by protecting the rich,” she said.

Marine Le Pen, the candidate for the far-right’s National Front party, labelled Sarkozy’s plans a “double dose of ultra-liberal remedies”.

France in crisis

The French president has been under pressure in recent weeks to deal with the economic crisis facing France and Europe. But he believes the worst is over.

“We can say, with caution, that we see elements of financial stability in France, Europe and the world,” Sarkozy said. “Europe is no longer at the edge of the cliff.”

His TV appearance comes just two weeks after France lost its treasured Triple A credit rating. Unemployment stands at nearly three million, a 12-year high, and public debt is at record levels.

Sarkozy, who is yet to make his candidacy for a second term official, has repeatedly tried to portray himself as a safe pair of hands with the economy as well as a leader who is prepared to take tough decisions.

Seeking to distance himself from François Hollande's declared war on the "faceless world of finance", the French president has advocated relaxing restrictions on the labour market in a bid to increase the competitiveness of French industry.

“We have to catch up in Europe and in the world. Our market share is declining,” Sarkozy said.

But his proposals failed to convince some economists in France.

“A lot of the measures he was talking about were very imprecise. I get the feeling he is someone who is trying to stay afloat and doesn’t know how to swim,” Tomasz Michalski, a professor of economics at HEC business school in Paris, told FRANCE 24.

Following Germany’s example

Sarkozy has modelled his reforms on those of neighbouring Germany, where an increase in VAT in 2006 was credited with boosting industry.

Trade unions and consumer groups have slammed the proposal saying it would weaken the spending power of consumers.

Sarkozy also appeared to signal the end of the statutory 35-hour week by proposing to allow companies more freedom to negotiate flexible working hours with unions on a local level.

But for Professor Michalski it is all too little too late.

“We have known about this competitiveness issue with Germany for years. It did not happen overnight so why did he not try to do something about it before,” he said.

The increase in VAT will not come into place until October, a move Sarkozy believes will encourage shoppers to spend their money before then, thereby boosting the country’s economy.

If he is re-elected for a second term the French president could face a tough task getting the law through parliament, where it is believed not everyone in his UMP party is in favour of the move.

Sarkozy’s German-inspired reforms are likely to please Chancellor Angela Merkel, who is believed to have offered to lend her support to Sarkozy’s re-election bid.

Merkel and Sarkozy were nicknamed ‘Merkozy’ for their close relationship and joint efforts to tackle the Eurozone crisis.

FRANCE 24’s International Affairs Editor Douglas Herbert said: “I think he is very happy to have Merkel’s support but it works both ways.”

“Sarkozy is someone she thinks she can trust to keep Europe on the right path.”

Date created : 2012-01-30

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