Sarkozy starts making up the rules of economics
This is quite extraordinary. Sarkozy pulls a rabbit-out-of-a-hat by ba`m boozling everybody b y settin a precedent of a president actually speaking to parliament alberit he had to make them all traipse out to Versailles to hear him.
When they got there all they heard was “‘Steady as we go’ mes garcons” which must have risked numerous heart-attacks in the finance ministries of Europe and in the Central Bankl. There’s not the slightest indication of any intention to try and pay any of France’s borrowings back. He’ll find it increasingly difficult to borrow for much longer!
The French press slavishly print it all without so far noticeable comment. The Spanish press is agog about the Burka as are the Telegraph and Times here!. The FT Deutschland is merely agog.
Christina Speight
FINANCIAL TIMES
23.6.09
Sarkozy rejects austerity measures
By Ben Hall in Versailles
Nicolas Sarkozy, French president, on Monday ruled out austerity measures to sort out France's rapidly deteriorating public finances as he outlined plans to put saving jobs ahead of economic reform and fiscal restraint.
In a historic address to a joint session of parliament at the Palace of Versailles - the first such occasion for more than 130 years - Mr Sarkozy underscored his determination to increase borrowing to soften the blow from the economic crisis, proposing a new public bond to pay for unspecified "priority" investments.
Mr Sarkozy, outlining his programme for the second half of his five-year term, also appeared to scale back France's previous commitments to shore up its public finances by calling for a change in the way deficits were addressed - a clear divergence with policies of other European governments of renewed budgetary rigour once the economic recovery is under way.
The French president said that the structural or underlying deficit would be eliminated with spending cuts and "courageous reforms".
The rest of the deficit would be "reabsorbed by allocating the proceeds of growth". He also ruled out tax cuts once the economy picked up.
France's deficit is expected to exceed 7 per cent of gross domestic product this year with a little over a third of that considered structural, or not due to the economic crisis.
"I will not have a policy of austerity," he told the assembled parliamentary deputies and senators in the prince's wing of the Versailles palace. "Because austerity policy has always failed."
Mr Sarkozy's pledge put him on a collision course with the European Central Bank and the German government, which have both urged fiscal restraint. Berlin has focused recent policy efforts on measures to restore public finances to balance, while the ECB fears higher government spending will backfire by undermining public confidence.
Speaking in Madrid on Monday, Jean-Claude Trichet, ECB president, said his "message at the present moment" was not to embark on any additional fiscal stimulus, adding that "it is absolutely of the essence there is a clear path towards a sustainable position".
Rather than detailing a reinvigorated reform agenda, as many of his allies had hoped, Mr Sarkozy appeared to play it safe, a least for the next year. "The crisis is not over. We do not know when it will end," he said
Instead, Mr Sarkozy focused mostly on cushioning the effects of the recession. He promised a big extension of "temporary unemployment" measures, whereby companies can lay off staff in return for reduced pay.
Mr Sarkozy made clear the government would make a decision in 2010 on reform of France's pay-as-you-go pension system - perhaps the most important issue for getting the deficit under control - rather than leave a decision until after the 2012 election, as some officials had feared.
Mr Sarkozy said reform would have to include the controversial issue of the pension age, which some in the government want to raise from 60 to, eventually, 67, but he did not spell out his preferred goal.
Mr Sarkozy backed a proposal for a parliamentary inquiry into the wearing of the burka, or face-covering veil. Many French politicians equate the wearing of the burka to female oppression and argue that it runs counter to France's tradition of integration. The president said the burka was "not welcome in France".
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Additional reporting by Ralph Atkins
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