Sarkozy gives nod to economists’ free-market growth plan

   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 and
a former advisor to the socialist president Francois Mitterrand, to lead a
43-member panel of international experts in identifying obstacles to growth.
   Their final report, entitled "300 proposals to change France," proposes a
raft of sweeping changes, from job market deregulation to local government
reform, life-long training, boosting Internet access, investing in green
technologies or opening up French borders to immigration.
   Presenting his conclusions to Sarkozy and half a dozen key ministers at the
Elysee palace, Attali said the combined effect of the reforms could add a
percentage point to French economic growth by 2012.
   "We believe these measures need to be implemented quickly, and we believe
there is a limited window of opportunity to do so," Attali said, between the
March municipal polls and June 2009, when France votes in European elections.
   He said they would slash unemployment from 7.9 to five percent, create two
million new jobs and cut French debt from 66 to 55 percent of gross domestic
product — as well as improve social mobility, ethnic diversity and even
increase the life expectancy of France’s poorest citizens.
   Sarkozy said he was "essentially in agreement" with the commission’s
findings, although he stopped short of saying he would adopt them wholesale.
   "Some may find your proposals frightening, I find them basically quite
reasonable… Our country needs an intensive course of modernisation," "
   "In a world that is changing at high speed, France has fallen behind
despite its exceptional assets," he said. "By seeking to regulate everything
in the smallest details, we have created a straight-jacket that prevents
growth."
   Sarkozy said a government seminar next month would start hammering out
reform priorities and that several of the report’s measures would be worked
into a draft bill on economic modernisation to be debated in the spring.
   He also said the government would work hand-in-hand with the ruling
right-wing UMP party, whose leader Jean-Francois Cope has warned it would
demand a say in any future reforms.
   As French voters fret about the cost of living, sluggish growth and the
knock-on effect of the US economic slowdown, Sarkozy faces mounting pressure
to deliver on his election promise to kickstart the economy.
   His government has revised its growth forecast for 2008 to 2.0 percent, but
private economists warn that is still too optimistic, predicting as little as
1.4 to 1.6 percent expansion.
   But the president was also facing loud protests from members of his UMP
party, who feared upsetting their constituents with unpopular reforms just
ahead of the municipal elections.
   Sarkozy therefore ruled out a contested proposal to abolish France’s 100
departments as a tier of government, splitting their duties between larger
regions and grass-roots groups of towns and villages, saying French people
were "attached" to the current system.
   He also said no to a shake-up of rules protecting the local pharmacy
business from full competition — though he said he backed deregulating other
protected sectors, such as taxis, hair dressers and legal professions.
   And he vetoed a proposal that sparked fierce protests from
environmentalists: for the removal of a national safeguard clause restricting
some types of research, including in biotechnology.
   Sarkozy also entirely ducked the issue of immigration, on which the report
called for an easing of rules to respond to labour shortage, directly
contradicting his party’s policy of stricter controls.
   And he failed to comment specifically on one of the report’s key measures
to boost employment: a cut on employers’ social charges, among the highest in
Europe, to be shifted in part to the VAT sales tax.

AFP