Socialist Hollande promises financial prudence

REUTERS - Socialist Francois Hollande, frontrunner to become France’s next president, promised on Saturday to restore public finances to health before loosening spending on social programmes dear to the Left.

Hollande also said that if elected he would shoot down plans unveiled this week by the government of his conservative rival President Nicolas Sarkozy to shift the burden of financing social welfare from companies to consumers.

Wary of a perception that the Socialists are soft on fiscal matters, Hollande said that fixing France’s strained public finances would be his overriding priority.

“We will perhaps do the inverse of what the Left has done in the past when we spent first and then tightened,” Hollande told a party meeting in the southern region of Correze, where he started his political career in 1983.

“We will restore (the finances) first and then redistribute. We will have to explain it to the French and they will keep their confidence (in us) if they are convinced that it is done out of concern for the common good.”

With France’s prized AAA credit rating under threat, public finances have become a major election theme with Hollande and Sarkozy vying to be perceived as the safest pair of hands to manage state coffers.

However, after credit rating agency Standard and Poor’s put France and other euro zone countries under review for a possible downgrade last month, Sarkozy changed tack, shifting his focus from public finances to reviving French companies’ waning competitiveness.

In a political gamble, his government said it would finance a cut in social welfare contributions paid by large companies with an increase in sales tax, sparking sharp criticism from the Socialists.

“If the French entrust me with the responsibility of (leading) the country, I will take the decision to abolish this bad reform,” Hollande said.

Hollande, who is to detail his political programme at the end of the month, said that he would shake up the tax system by making companies pay more than small firms and that the tax on earned income and capital gains would be set at the same level.

Despite never holding a ministerial post, Hollande is the favourite in the polls against Sarkozy, who is widely expected to announce in February that he will seek a second term in the two-stage election on April 22 and May 6.

Hollande’s campaign took on a more aggressive tone this week, using an open letter to brand his rival “president of the privileged” and accusing him of running the economy onto the rocks.