PARIS, Nov 20 - French Finance Minister Francis Mer said on Thursday that the strong euro, while a concern for French exporters, should not pose a threat to France's economic recovery if it does not remain at its current peak. "Margins among exporters are a bit less comfortable, because they are battling against Japanese and American competitors," Mer told French LCI television. "But this is not dramatic, and unless the euro settles in for the long-term at its current level of $1.20, which seems high to me,...there is no need to panic and I do not believe for one minute that there is a risk of suffocating the recovery." Mer, who had expressed his concerns about the euro-dollar rate on Wednesday, reiterated that the government still intended to keep reducing taxes while holding public spending steady as it grapples with a swollen public deficit and sluggish growth.
"Tax cuts are a way to generate growth...So we are still aiming to reduce taxes on economic activity using the most efficient methods to achieve our goal, which is to restart the motor," Mer said. "The European economy is in the process of taking off again. All the indicators are up -- there are even some which are excessively optimistic -- but we are probably at the beginning of a recovery which will enable us to see a return next year to more normal behaviour by investors and consumers." The euro reached a record high of $1.1978 against the dollar on Wednesday, following news of U.S. plans to slap quotas on Chinese textile imports and separate news of a drop in net purchases of U.S. stocks and government bonds in September. Mer said on Monday that growth seemed to be nearing an annual rate of two percent this quarter, striking an optimistic note after France narrowly avoided slipping into recession earlier this year. Recent economic indicators have backed the view in financial markets that a long-awaited recovery may finally be underway in France, which accounts for around a fifth of euro zone output.//