Sarkozy Goes on Anti-Union Offensive

Sarkozy’s reforms too tame for some
By John Thornhill in Paris
Financial Times

Published: August 2 2007 18:52 | Last updated: August 2 2007 18:52

The French parliament concluded its extraordinary summer session on Thursday night having adopted four big packages of legislation in a frantic burst of political activity.

However, in spite of such remarkable activism, Nicolas Sarkozy, the new president, is facing criticism from some supporters that his government is not reforming as boldly as promised.

Boasting a clear parliamentary majority, Mr Sarkozy has found it easy to push through legislation cutting taxes on overtime and mortgage interest payments, granting more autonomy to universities, toughening sentences for repeat offenders and mandating minimum service levels on public transport during strikes.

The president has made clear he is pushing full speed ahead with his promise to bring about a “rupture” with the failed policies of the past and revitalise the eurozone’s second biggest economy.

Wishing his ministers a good vacation following the last cabinet meeting of the summer on Wednesday, he told them to keep their mobile phones switched on and to prepare for even more intense work on their return in September.

But some deputies from Mr Sarkozy’s centre-right UMP party, who have already been grumbling about how many Socialist ministers have been included in his government, are now complaining he has not been aggressive enough in tackling France’s sprawling civil service and getting a grip on public finances.

Even though they faced little parliamentary opposition, ministers shied away from some of their more controversial proposals that could have provoked confrontation with the unions.

On Tuesday François Fillon, the prime minister, outlined measures to cut civil service numbers next year by not replacing 22,700 retiring staff and to trim the projected budget deficit from 2.4 per cent in 2007 to 2.3 per cent next year. However, Mr Fillon’s reforms fell well short of Mr Sarkozy’s campaign promises not to replace half those retiring from the civil service and to revolutionise the public finances.

Mr Fillon argued that reforms would acquire a momentum of their own, making it easier to move faster later to meet Mr Sarkozy’s promises over the course of his five-year term. The government’s tax cuts would also stimulate faster economic growth, which would enable the deficit to be cut more aggressively later.

Christine Lagarde, the finance minister, estimated that the €13.8bn (£9.3bn, $18.9bn) tax cuts approved by parliament this week could add at least 0.3 of a percentage point to economic growth in 2008. With the unemployment rate having fallen to 8 per cent, its lowest level in 25 years, the French economy would enter a virtuous cycle of higher growth, falling unemployment and shrinking deficits, ministers hope.

But in a biting editorial, the left-leaning Le Monde newspaper criticised Mr Sarkozy for not going further in his first three months in office. It said that Mr Fillon, who has seemed almost invisible at times in the Sarkozy administration, had finally found a role: announcing the government’s retreats on its most controversial measures.

“These evolutions show that the ‘hyper-president’ is not Superman: like his predecessors he must pull back on his campaign promises,” the newspaper said. “The man of action, elected on the slogan ‘I do what I say’ is already confronted with the limits of his power, even though the first months of a new mandate are the most favourable for passing important reforms.”