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France

French PM Valls passes first parliamentary test

© AFP

Text by FRANCE 24

Latest update : 2014-04-08

New French Prime Minister Manuel Valls won a confidence vote in parliament on Tuesday after presenting to deputies a raft of new policies designed to pull France out of the economic doldrums.

Deputies in the lower house National Assembly voted 306 to 239 to support Valls, named as prime minister last week in a cabinet reshuffle ordered by President Francois Hollande after his Socialist Party put up a dismal showing in local elections.

The confidence vote, dubbed Valls’ “moment of truth” by the French press, followed a major policy speech by the new prime minister.

Addressing parliament earlier Tuesday, Valls vowed to slash labour costs by 30 billion euros ($41 billion) and ease taxes for the worst-off in a bid to turn around the country's struggling economy.

Besides the cut in labour costs – or payroll taxes – Valls’ new proposals also include a decrease in corporate income taxes and household taxes.

Valls also confirmed Hollande’s pledge to trim 50 billion euros ($69 billion) from the budget by 2017.

The cuts would include 19 billion euros from state spending, 10 billion euros from health insurance and 10 billion euros from local governments. He did not specify where the rest would be found.

"Of course we must straighten up our public finances but not by destroying our social model or our public services," said Valls. "I am for respecting our commitments, for budget responsibility, not for austerity," he said.

The French prime minister’s address came days after Valls took over the post from his predecessor, Jean-Marc Ayrault, who left the post after the ruling party’s disastrous showing in last week’s local elections.

“Valls has been attempting a balancing act in terms of policy,” said FRANCE 24’s Catherine Norris Trent, reporting from the French National Assembly.

“The prime minister noted that France needed to look to the future and build on economic growth,” explained Norris Trent. “But on the other hand, there was also a nod to the left wing of the Socialist Party when he announced measures for the poorest members of society. Valls is trying to build France’s economy without breaking France’s social model.”

Valls targets high euro

In his address to parliament, Valls also warned that France’s efforts to improve competitiveness and reduce labour costs should not be undermined by a high euro.

"The efforts that we are making to reduce our deficit, to implement structural reforms, improve the competitiveness of our businesses and lower labour costs should not be swept away by a too-high level of the euro," he said, adding that the euro was now "10 percent more expensive than in the summer of last year, which obviously weighs on our exports."

"The efforts that we are making to reduce our deficit, to implement structural reforms, improve the competitiveness of our businesses and lower labour costs should not be swept away by a too-high level of the euro," he said.

Calling for an EU-wide growth initiative, Valls noted that the path to growth involved “large investments and policies to create jobs specifically targeting youth. Otherwise," he warned, “all our efforts to reduce the deficit will be in vain," he said.

Comparing the European Central Bank's policies with its counterparts in the US and Japan, Valls noted that the ECB was less supportive of economic growth.

The EU has given France a deadline to reduce its public deficit to under 3.0 percent of output by the end of 2015, from 4.3 percent last year.

(FRANCE 24 with AP, AFP and REUTERS)

Date created : 2014-04-08

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