Hollande pledges cuts to taxes and public spending

French president François Hollande has pledged to cut public spending, lower taxes and reduce labour costs for business in a bid to convince a sceptical public that he remains capable of regenerating France’s stuttering economy.

In a New Year broadcast to the nation, Mr Hollande acknowledged that 2013 had been an “intense” and “difficult” year because of a financial crisis “longer and deeper than we ourselves had expected”.

He added: “We have paid the price in weak growth and a succession of redundancy plans.”

Suffering record low approval ratings for a post-war French president and under pressure from his EU partners to step up the pace of structural reform in the euro zone’s second largest economy, Mr Hollande reiterated that his priority in 2014 would be to lower unemployment, currently at close to 11 per cent of the workforce.

'Invert the curve'
A renewed upward surge in jobless numbers in November, despite a wave of state-sponsored jobs, had jeopardised his promise to "invert the curve" of unemployment by the end of 2013.

He proposed a new “responsibility pact” for business, under which he promised a cut in social charges on labour and a cut in red tape in exchange for more job creation by companies and more dialogue with trade unions.

He also said France’s big tax burden was “too heavy” and specified that a review of the tax system launched last month by Jean-Marc Ayrault, the prime minister, would aim to lower taxes. He promised a reduction in public spending – which accounts for 57 per cent of GDP – to finance this.

“We have to spend less to reduce our deficit, but also to be able, over time, to lower taxes.” – (Copyright The Financial Times Limited 2014)