GO
Loading...

France's Hollande sees stronger 2014 growth than forecast

Friday, 30 Aug 2013 | 6:58 AM ET
French President Francois Hollande
Getty Images
French President Francois Hollande

President Francois Hollande said on Friday he believes French economic growth in 2014 will be stronger than expected in official forecasts, and he fended off criticism of his economic reforms.

Hollande told daily Le Monde that a series of reforms conducted since he took office 15 months ago were producing positive effects on the economy and would keep building momentum.

"I wager that we will be able to raise the 2014 growth forecast slightly," he was quoted as saying in an interview by the newspaper.

(Read more: Investors eyeball French pension reform plans)

He did not give a new target. France's official growth forecast for 2014 is 1.2 percent.

The Bank of France earlier this month doused hopes of a quick economic rebound when it published a forecast for growth of just 0.1 percent in the third quarter, citing weak domestic demand as a slowing factor.

The second quarter was a relatively robust 0.5 percent, however.

French companies beat low expectations: Pro
Yannick Naud, portfolio manager at Glendevon King Asset Management, discusses the French earnings numbers.

Hollande is fighting to kickstart growth through tax credits for companies while battling to bring down record joblessness, but his efforts are being complicated by EU-imposed belt-tightening aimed at shrinking the public deficit.

The Socialist president said he recognized growing frustration among business leaders with plans to hike corporate taxes in the 2014 budget, saying it was time to ease off hikes.

(Read more: Why the French may say 'non' to 'Made in France')

"Thanks to the major savings achieved, the time has come for a pause (in tax rises) - earlier than we had foreseen," he said.

Finance Minister Pierre Moscovici sought on Thursday to address anger over high taxes, telling business leaders the increases to be unveiled in an amended 2014 budget next month would be less severe than expected.

The government this week outlined the terms of an overhaul of its pension system that will gradually extend the pay-in period to 43 years by 2035 while also nudging up pension contributions paid by workers and employers.

(Read more: 'House on Fire': Business Leaders Slam France's Hollande)

But that reform, like an overhaul of rigid labour rules earlier this year, has been criticised by some economists as being too cautious and failing to fix longstanding structural problems.

"Never before, in the space of 15 months, has France undertaken as many structural reforms," said Hollande. "These are big steps, judging from the distance covered."

Follow us on Twitter: @CNBCWorld

Featured

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • Jan Dunning, CEO of St Petersburg-headquartered hypermarket chain Lenta, says the situation in Ukraine has had no impact on the group, as consumer confidence remains unaffected in Russia.

  • Vincent Deluard, European strategist at Ned Davis Research Group, says the strong euro is a problem for the region's companies, especially for the large exporters.

  • European shares closed higher on Thursday as investors brushed aside concerns regarding Ukraine and focused instead on Wall Street earnings and the latest U.S. jobs data.