26 July 2004, 10:58  French PM sees 2004 growth well above 2.3%

The French economy should grow at a rate well above 2.3 percent this year and unemployment will decline substantially in 2005, French Prime Minister Jean-Pierre Raffarin said in an interview to be published on Sunday. The comments, made to French weekly Le Journal du Dimanche (JDD), were the most positive of any French government minister in recent weeks. Last Thursday, French Budget Minister Dominique Bussereau predicted growth of 2.4 to 2.5 percent this year after figures showed that French consumer spending had risen 4.2 percent in June, the largest monthly rise in eight years. "I am optimistic, but prudent," Raffarin told the JDD. "The experts did not foresee the drop-off in growth that we have seen since 2000. This year, we should have a result that is well above our forecast (2.3 percent)." A spokesman for the prime minister's office confirmed that Raffarin was predicting growth above the 2.3 percent level in the interview, a copy of which was made available to ahead of publication. The government based its 2004 budget on a growth forecast of 1.7 percent, but optimism about investment and consumer spending in the euro-zone's second-largest economy has led private and official forecasters to raise their estimates in recent months.
French statistics office INSEE is calling for growth of 2.3 percent and a poll of 16 economists last week yielded an average growth forecast of 2.2 percent. Raffarin said France's budget deficit would be "several billion euros" below estimates and said he expected France's unemployment rate, which currently stands at 9.8 percent, to begin declining in the second half of 2004 and to drop significantly next year.
He called France's 35-hour workweek law "bad" and said the French needed to increase the number of hours they worked, including finding jobs for those currently not working. But Raffarin also warned companies against using threats to win concessions from unions. Last week, workers at a Robert Bosch car parts factory in France voted to work an extra hour per week for no extra pay in order to prevent the company from moving production to the Czech Republic, where labour is cheaper. "In certain cases, I have seen abuses of power," Raffarin said. "Certainly, international competition is fierce, but this is no excuse to create a social jungle." Turning to domestic political matters, Raffarin reiterated President Jacques Chirac's ruling that any government minister assuming the presidency of his conservative UMP party would have to give up his or her cabinet position. Ambitious Finance Minister Nicolas Sarkozy has set his sights on the UMP presidency, a post that would give him a powerful platform to launch a bid for Chirac's position in the next presidential election in 2007. But Chirac has threatened to strip Sarkozy of his high-profile position at the finance ministry if he seeks the party's top spot. Raffarin told the paper that other ministers in the government had already expressed their interest in Sarkozy's position in anticipation of his departure. "That is true," he said. "But the diversity of the candidates for the finance ministry proves that some are simply not aware of the profile and complexity of the position. The musical chairs game has not begun."///

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