France's Sarkozy to Step Up Re-Election Bid
French President Nicolas Sarkozy is expected to unveil a handful of new measures to reinforce proposals he has already outlined, as well as a “Letter to the French people” on his vision for the country’s future as he steps up his campaign for re-election.
Many of the French president’s proposals, including an end to the 35-hour working week in France and a balanced budget by 2016, were set out earlier this year.
He tried to appeal to right wing voters, who might be lured away by rival Marine Le Pen of the National Front, with a call for caps on immigration and has attacked EU trade laws, taking a more protectionist stance.
He has also said he will launch a campaign to end tax haven secrecy, mainly in response to a proposal put forward by his socialist challenger Francois Hollande who wants to impose a 75 percent tax on those who earn over 1 million euros a year.
On Thursday, Sarkozy will focus on his track record as a “crisis manager” and a man of the people, according to French media. His letter to the French people will outline his values and vision for France.
“A Sarkozy win will keep markets happy in the short term before questions arise over the growth plan. His commitment to austerity should cause French paper to be well supported,” Charles Diebel, Head of Market Strategy at Lloyds Banking said in a note to clients earlier this week.
Hollande on Wednesday unveiled measures he would put in place in his first year of office if elected, including a 30 percent pay cut for ministers.
He also plans to freeze fuel prices, increase allowances for parents of schoolchildren to offset the cost of materials and text books, and wants to guarantee interest rates above inflation on tax-free savings accounts.
Hollande said previously he wanted to re-negotiate the EU fiscal pact – the agreement struck by 25 EU member states last year designed to limit overspending by governments – in a move which alarmed European leaders.
In his manifesto, he said he wanted to propose a “responsibility, growth and governance pact” to modify and complement the existing agreement.
He would also enable those who started work at 18 and who have made social security contributions for 41 years to retire at 60, going against the trend in most of Europe of raising the retirement age to cope with ageing populations.
French budget minister Valerie Pecresse of Sarkozy’s ruling UMP party criticized Hollande’s proposals on Wednesday evening and attacked his “uncontrollable desire” to increase spending.
She compared his approach to “the Greek model” and said Sarkozy would reduce spending to protect the country’s future.
To silence critics who argue Hollande’s policies are not realistic in times of low growth and high debt, his “road map” includes presenting to parliament a multi-year plan to achieve a balanced budget by 2017.
“A Hollande victory is bound to create market volatility due to the possible change domestically and internationally,” Diebel warned.