French President Francois Hollande said on Wednesday he would accelerate reforms to boost growth, highlighting steps to increase homebuilding and give tax breaks to poorer households as he tries to win back voter confidence.
The most unpopular French president in modern history has come under growing fire from both the opposition and ruling Socialist party lawmakers over his economic policy. His government was forced to abandon growth and fiscal targets last week.
As he prepares for tough negotiations on the 2015 budget both at home and with France’s EU partners, Hollande sought in an interview with Le Monde to explain that he would work on both fronts: reform France and help low-income households.
“We need to go faster and further,” he said in the interview. “I want to accelerate reforms to boost growth as fast as possible,” he said, starting with home construction.
He gave no concrete details beyond saying the plan would tackle taxation, regulatory, and financing issues for construction.
Housing has become a major headache for the government, with housing starts in France down to a 16-year low — a serious drag on the economy. Property developers blame the problem partly on regulations that took effect this year to set rent limits in cities with more than 50,000 people.
Hollande also confirmed that the government would agree a replacement tax break on a similar scale to one struck down by the constitutional court earlier this month. The initial plan had been to bring lower-paid workers 2.5 billion euros ($3.33 billion) in payroll tax cuts next year.
The Socialist president also confirmed the government was working on a reform of welfare benefits for the lower paid.
Self-proclaimed “rebel” lawmakers among the ruling Socialist party say Hollande is doing too much for businesses, and they have become increasingly vocal ahead of the party’s annual summer gathering scheduled for Aug. 30.
Finance Minister Michel Sapin said last week that weaker-than-expected growth and inflation in France and Europe meant the public deficit would come in higher than expected this year, and he hinted Paris would also fail to bring its deficit under the EU’s 3-per cent-of-GDP cap next year.
France needs to submit its draft budget plan to the European Commission by mid-October for review. The EU executive can send it back for rewriting if it is not satisfied.
Paris also potentially risks sanctions from its EU peers if it misses the EU deficit target again next year. They could, though, give France yet another reprieve like the one they gave the country in 2013.
Hollande also reiterated French calls for the European Union and its central bank to do more to boost growth through investments and weaken the euro, which he said was still overvalued.
(Reporting by Ingrid Melander; Editing by Andrew Callus)
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