PARIS (MNI) – All indicators point to faster growth of the French
economy in 4Q and a continuation of the trend this year, France’s Prime
Minister Francois Fillon said Monday.

Despite the slowdown in Eurozone activity expected in the first
half, the government’s goal of 2% GDP growth this year “is within our
reach,” Fillon claimed in his New Year’s greeting to the press.

The government aims to bolster activity via outlays of E15-20
billion this year for research, development and investment in sunrise
sectors, and E4.3 cuts in business taxes, Fillon said.

At the same time, commitments to reduce the public deficit from
7.7% of GDP last year to 6.0% this year and to 3.0% by 2013 will be
“scrupulously” respected, he reiterated.

“Because it is not possible to increase our tax burden, which is
already one of the highest of all European countries, we are conducting
the most severe policy to limit public spending…realized in our
country in 20 years,” he said proudly. “It’s a kind of revolution for
French public finances.”

The principle challenge is to create jobs, especially for young
people, Fillon said, promising “new measures” for the latter in the
coming weeks.

Wading into the recent debate over the 35-hour work week within the
ruling party and among the opposition socialists, the prime minister
highlighted the steps of his government to loosen this limitation, which
should be the basis for any eventual measures “to go further” in this
direction.

Policies concerning work time should take account of the needs to
remain competitive, reduce the deficit and protect the country’s social
system, but also of the European environment and the need for
convergence in this matter, he said.

The reductions in employers’ payroll charges linked to the shift to
the 35-hour week are in fact really a public subsidy for low-skilled
jobs, he observed.

“Lifting the 35-hours would thus resolve only in part the problem
of labor costs of these low-skilled jobs,” he said. “Therefore, I want
to tell business that it is out of the question to go back on these
reductions, which are a key element of our competitiveness.”

In encouraging industry branches and individual companies to tackle
the issue by taking advantage of existing regulatory leeway, Fillon
suggested that his government would not take the initiative.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: M$F$$$,M$X$$$,MGX$$$,M$$CR$]