• French president Hollande outlined his plans on TV on Sunday (Photo: Francois Hollande)

Hollande: '€30 billion must be found'

10.09.12 @ 09:26

  1. By Nikolaj Nielsen
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BRUSSELS - French Socialist President Francois Hollande has outlined a two-year plan to overhaul the country's stagnating economy and to boost employment.

The President conceded the task ahead to stimulate growth and restore public finances would be formidable, but promised in a live TV address on Sunday (9 September) to achieve results by 2014.

"My mission is a recovery plan and the timeframe is two years," he said.

The country's hope of 1.2 percent growth for 2013 was recently dashed as figures indicated the economy will probably expand by just 0.8 percent next year.

With unemployment passing 10 percent for the first time since 2002 and increasing, the French leader tried to persuade the public that an increase in taxes would help lower the budget deficit to 3 percent of GDP in 2013.

"Thirty billion [euros] must be found," said Hollande.

He added that all the ministries, with the exception of education, security and justice, would have to reduce their costs by a total of €10 billion. Companies will contribute an additional €10 billion in taxes, with the remaining €10 billion levied on households.

Tax the rich

He also reaffirmed a new 75 percent tax on people earning more than €1 million a year, reportedly causing a stir among some of France's wealthiest.

The tax would affect between 2,000 to 3,000 people.

On Saturday, France's richest individual, Bernard Arnault of the luxury goods consortium LVMH, said he would apply for Belgian dual citizenship, according to the Belgian daily, La Libre Belgique.

Arnault says his decision has nothing to do with the 75 percent tax and that his fiscal homestead would remain in France.

Hollande on TV noted there would be no exceptions on the wealthy and said: "He [Arnault] must weigh up what it means to seek another nationality because we are proud to be French."

France's economy has failed to expand in the past three quarters and just over 3 million people are now unemployed.

In August, troubled car-maker Peugeot Citroen announced it would cut some 8,000 jobs in the country, with labour unions threatening widespread strikes if the government does not intervene.

Hollande said he would reverse the unemployment curve by 2014 and promised to create an additional 100,000 new jobs before the end of the year.

His government will also pressure businesses and unions to quickly reform the labour market. Should the two fail to put forward viable proposals that would offer greater worker protection but allow companies to be more flexible in hiring and firing, he said his government would intervene to impose the labour market reforms itself.

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