PARIS (MNI) – France can look forward to a pick-up in growth next
year, provided investors and consumers are convinced that deficit
targets will be hit, ECB Governing Council member Christian Noyer said
Wednesday.
“The most important thing, from my viewpoint of course, is that the
government take a very, very clear line on the pursuit of the reduction
of the deficit,” the governor of the Bank of France said in a radio
interview.
“That’s what the markets awaited, that’s what permitted interest
rates to remain low in France, to go even lower,” he said. “That’s what
gave us international confidence.”
Under such conditions, after the soft patch during the elections
this spring, there should be a “gradual recovery” starting in the second
half of this year, which could allow the domestic economy to surpass the
IMF’s latest forecast for growth next year of only 0.8%, Noyer argued.
“Today I think that 1% [growth] should be attainable – at least 1%
or more,” he said. “Provided we remain on a very clear strategy of
deficit reduction aimed at hitting the targeted deficits” of 4.5% of GDP
this year and 3.0% next year.
However, if households and investors are not convinced, “the
savings rate will rise, there will be less consumption, less investment,
less growth,” he warned.
At the same time, structural reforms must be pursued to overcome
the “problem of competitiveness in France,” the central banker said. One
way to reduce labor costs would be to lighten the burden of social
payroll charges that employers pay, he said. “We must find other
resources” to finance social spending.
–Paris newsroom, +33142715540; email: ssandelius@marketnews.com
[TOPICS: M$$EC$,M$$CR$,M$F$$$,MGX$$$,MT$$$$]
