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Hollande offers tax-cutting pact to French companies Cameron trumpets British recovery in ‘swipe at France’

PARIS, Jan 1, (Agencies): President Francois Hollande on Tuesday offered French companies what he called “a responsibility pact” to tackle unemployment under which they would reap the benefit of lower labour taxes in return for hiring more workers. “It is based on a simple principle: lower labour charges and fewer restrictions on their activity in return for more hires and more dialogue with trade unions,” Hollande said in a New Year’s address broadcast on national television. Hollande did not specify how he would go about reducing labour charges but it is a possibility that has been mooted under a wide-ranging reform of taxes already promised by his Socialist government for implementation during the remainder of his mandate through to 2017. French corporate margins are among the lowest in Europe, partly due to the high labour charges needed to fund its generous welfare state.

Unemployment is stuck at around 11 percent, although Hollande - whose popularity ratings are at an all-time low for a president of France’s 55-year-old Fifth Republic - argues it has now hit a peak and is set on a downward curve. “Of course the results are taking a while to appear, but they are there ... I tell you again tonight: I have one priority, one goal, one commitment, and that is employment.” Pollsters say Hollande’s government runs the risk of a massive protest vote against it in European Parliament elections due in May. Hollande said he expected to come up with new proposals on Europe with Germany’s newly re-elected chancellor Angela Merkel early in the year, without elaborating.

Prime Minister David Cameron boasted Wednesday that Britain would become a post-recession flagship in 2014, in what was reported as a swipe at France’s “disastrous” economic policies. Writing in The Times newspaper, Cameron said Britain was a country on the rise as he warned against “the great mistakes that led up to the great recession — more borrowing, more spending and more debt”. Though Cameron did not name the “countries currently following that approach”, The Times said it was a “swipe at France” and an “apparent gibe” at President Francois Hollande. “Cameron’s dig at France in warning over debt”, said the front page. His remarks “will be widely interpreted as an attack on Mr Hollande, who is under pressure as France’s economy continues to struggle,” the daily said. Cameron wrote: “2014 is when we start to turn Britain into the flagship post-great recession success story.

“With record numbers of new businesses, we can be the enterprise capital of Europe. “We must not resurrect the dangerous thinking that got us into the mess from which we are now recovering,” the centre-right Conservative leader warned. Blaming the previous centre-left Labour government, which lost power in 2010, he said the British economy contracted by 7.2 per cent during the economic downturn.
“If you doubt how disastrous a return to Labour-style economics would be, just look at countries that are currently following that approach,” he wrote. “They face increasing unemployment, industrial stagnation and enterprise in free-fall. The opposite of what’s happening here. “Our recovery is real, but it’s also fragile, and there are more difficult decisions ahead. A return to that economic madness would devastate this country.”

While Britain is predicting economic growth of 1.4 percent in 2013 and 2.4 percent in 2014, France’s national economics statistics institute INSEE predicted growth of 0.2 percent for 2013, while the country’s belt-tightening budget is based on projected growth of 0.9 percent in 2014. France’s economy contracted 0.1 percent in the third quarter of 2013. Socialist French Prime Minister Jean-Marc Ayrault said last month that his government would not copy British economic policies, saying they had created poverty and inequality. In Britain, unemployment has hit a four-year low, at 7.4 percent. INSEE said the French unemployment rate rose by 0.1 percent in the three months to September to 10.5 percent. Cameron said his government would reduce the national deficit further in 2014, cut income taxes, slash red tape for small businesses and invest in infrastructure projects. He pledged to cap Britain’s overall welfare budget. “New year is a time for resolutions. Here’s mine: to make 2014 the year in which Britain begins to rise,” he said.

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