France Ends Economy Policy Zig-Zag to Focus on Investment

France’s Finance Minister Michel Sapin declared an end to the swings in economic policy that have marked the Socialist government’s term, as President Francois Hollande seeks to reassure business and bolster investment.

“The economic world needs certainty,” Sapin told journalists Thursday in Paris. “When you zig-zag too much you can end up staying in exactly the same place. We’re not going to do that.”

The remarks are the latest from Hollande’s ministers insisting that the defeat of Socialists across the country in the March 29 local elections won’t alter the government’s determination to cut public spending or reduce taxation on business.

Prime Minister Manuel Valls will propose measures next week to boost investment and provide employment incentives, while Sapin is preparing fresh spending cuts and budget forecasts to be published by mid-April.

The Socialists and their allies won 25.5 percent of the vote in Sunday’s elections, compared with 37.5 percent for former President Nicolas Sarkozy’s UMP and its allies. The anti-immigration, anti-euro National Front won 22 percent.

Socialist seats in the French administrative districts fell to 912 out of a total 4,108, from 1,439 previously.

Stay on Course

“Of course you have to listen, there can always be adjustments but on the essentials -- supporting companies, cutting labor costs -- yes, we need to stay on course,” Valls said in the National Assembly on April 1. “We need to foster the recovery.”

That strikes a contrast to 2013 when business leaders repeatedly complained that Hollande’s government took away with one hand what it gave with the other.

The finance ministry is maintaining its forecast for gross domestic product to expand 1 percent this year, though that level should now be seen as a “floor” rather than a “ceiling,” Sapin said.

The government is studying its next steps in economic reform, including changes to the unemployment benefits system, Economy Minister Emmanuel Macron said, after his own omnibus reform bill comes into effect in July.

“The strategy is to modernize the economy, to open up, to unlock growth,” Macron said in Berlin Tuesday. “We’re doing what we said we would. We’re reforming at the same pace, we need to be consistent.”

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