Bloomberg News

Hollande Should Avoid Economy Shock, France’s Schweitzer Says

November 03, 2012

French President Francois Hollande shouldn’t seek to create an economic “shock” with his effort to improve competitiveness in the country, former Renault SA (RNO) Chief Executive Officer Louis Schweitzer said.

“I don’t believe in a shock, I’d rather see gradual action,” Schweitzer said today on Europe 1 radio. Cutting payroll taxes by between 20 billion euros ($25 billion) and 30 billion euros isn’t a “miracle response” to France’s situation, he said.

The remarks lend support to Hollande as he seeks the support of both unions and executives for an overhaul of the French economy intended to reverse a surge in unemployment in the wake of Europe’s sovereign debt crisis.

With growth stalled for three quarters and companies including PSA Peugeot Citroen SA, Alcatel-Lucent and drug-maker Sanofi cutting thousands of jobs, some executives have called for Hollande to slash payroll taxes to reduce labor costs and make French industry more competitive.

Cutting charges has to be “one element of a global policy that needs to be implemented over time,” Schweitzer said. This economy is very difficult and companies are “nervous,” he said. “What’s needed is continuous dialog.”

Prime Minister Jean-Marc Ayrault will receive a report on competitiveness from Louis Gallois, former head of European Aeronautic Defence and Space Co., on Nov. 5 and set out the government’s plans the following day. Hollande has also asked unions and companies to agree on a plan to increase labor flexibility by year end.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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