PARIS (MNI) – Unemployment in France is on a downward path but
there are still hurdles to clear, French Finance Minister Christine
Lagarde said in a radio interview Wednesday.

Speaking to RTL Radio, Lagarde also said that economic growth in
the second quarter would be “much better than the first,” when French
GDP expanded by a meager 0.1% q/q. She said consumption was picking up,
citing strong results so far in the summer discounting season, with
sales up 15% compared to a year ago.

Referring to June figures that showed an unexpected drop in
unemployment, Lagarde declared: “I’m pretty wary of triumphalism. Yes,
it’s a good figure…We can rejoice, but the battle is not yet won.”

She added: “We have some months in which [unemployment] rises
slightly and some months in which it drops slightly, but the tendency is
pointed downward.”

In fact, the number of unemployed people has risen in every other
month this year except for March.

The Economics Ministry on Tuesday evening released data showing a
June drop of 8.6%, or 0.3%, in the number of registered jobless people
seeking full-time employment. Taking into account jobseekers already in
full- or part-time jobs, however, the total rose by 15,600 or 0.4%.

But Lagarde said the former category — category A — was her
“target, and that is going down.” She expressed satisfaction that the
unemployment rate among French youth had dropped, but also noted that it
among those fifty years and older “it is rising, and that’s a category
in which we must make more of an effort.”

The finance minister said that deficit cutting measures would
“multiply” in the months ahead as the government moves to a policy of
“budgetary rigor” to cut the public deficit. She said she, other
ministers and President Nicolas Sarkozy would work “calmly” to identify
tax deductions that need to be either eliminated or reduced, but she
declined to go into detail on additional measures.

The government aims to cut the public deficit to 6.0% of GDP next
year, to 4.6% in 2012 and to 3.0% in 2013, assuming GDP growth of 2.5%
from 2011 onward — an assumption that many have criticized as too
optimistic.

A freeze on nominal government spending will be imposed through
2013, with a reduction in operational outlays of 5% next year and 10% by
2013.

Prime Minister Francois Fillon earlier this month said that between
now and the end of 2011, the government would have to find E40 billion
in savings. He said that E15 billion of that would come from ending the
crisis-induced stimulus program, E11 billion from tax revenues and E14
billion from savings on outlays of public officials.

On the revenue side, the government intends to tighten or close tax
loopholes and incentives amounting to up to E10 billion over the next
three years.

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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