" ....jobless rate rose to a symbolic 10 percent in January
PARIS - Thierry Breton arrived for work Monday as France's fourth finance minister in less than a year, ready to pick up the unfinished business of restoring the French economy to good health.
Herve Gaymard, who resigned last week in a scandal over his lavish publicly funded apartment after less than three months in the job, put on a brave face as he handed control over to Breton.
Gaymard bid Breton "welcome to your new home" as he arrived at the ministry building in eastern Paris. After a brief meeting with Breton behind closed doors, Gaymard left to applause from members of his staff.
Breton, a renowned turnaround specialist who rescued France Telecom from its 2002 debt crisis, was named within hours of Gaymard's resignation on Friday.
"My actions will be in continuity with those of my predecessors, Herve Gaymard, Nicolas Sarkozy, of course, and Francis Mer," Breton said in a short speech.
France's soaring unemployment is the most visible challenge facing President Jacques Chirac's conservative government and its new finance chief, two years ahead of presidential and legislative elections.
The jobless rate rose to a symbolic 10 percent in January — its highest in almost five years — after five flat months at 9.9 percent.
The government's pledge to cut unemployment to 9 percent this year now looks unlikely to be met, many economists say, with the jobless figures still going up and economic growth expected to lose steam.
Breton, 50, is likely to keep up a purchasing-power drive championed briefly by Gaymard and by Sarkozy before him. With interest rates set by the European Central Bank for the entire euro zone, measures to boost consumer spending are one of the main economic levers still in French hands.
On the upside, official statistics institute Insee said Monday that its main consumer confidence index improved to minus-23 in February from minus-25 in January.
The government newcomer inherits unfinished plans for mortgage deregulation — allowing people to raise cash more easily against the value of their properties — and increasing the transparency of supermarket pricing in order to stimulate competition.
He will also oversee the planned stock market launches and partial privatizations of state-owned nuclear energy group Areva and utilities Electricite de France and Gaz de France, later this year.
But the biggest headache could come from trying to reduce France's public deficit to the European Union (news - web sites) limit of 3 percent of gross domestic product, while also delivering tax cuts already promised by Chirac.
Deep public spending cuts — the obvious way to reconcile the two demands — are off-limits for most democratic governments ahead of important elections. In France's heavily unionized political environment they would be suicidal.
France's current economic predicament will present a challenge even for Breton, who steered France Telecom out of its 2002 financial crisis — when debt topped 70 billion euros ($92 billion).
Gaymard resigned 10 days after a satirical newspaper revealed that he, his wife and their eight children were living in a luxury 14,000-euros-a-month ($18,500-a-month) apartment paid for with public funds.
The government responded by announcing new rules to limit ministers' housing budgets and plans further initiatives to clean up its image.
The choice of Breton as finance minister — a job with an annual salary of about 150,000 euros ($200,000) — could also help to turn the page. He leaves behind both a 1.3 million euros ($1.7 million) France Telecom pay packet and several non-executive directorships.
There were nevertheless some raised eyebrows over the appointment, which puts Breton in effective charge of telecommunications policy.
Socialist lawmaker Arnaud Montebourg, who campaigns on governance and transparency issues, pointed out in a radio interview that Breton "is now the minister responsible for France Telecom — of which he was chairman and CEO 24 hours ago."
The company's board also rooted for continuity Sunday, naming insider Didier Lombard to succeed Breton in the top job. But investors reacted warily to the promotion of Lombard, who has never headed a major company, and France Telecom shares closed Monday 1.8 percent lower at 22.80 euros ($30.23). |
