France's Hollande says to accelerate reforms to boost growth

Wed Aug 20, 2014 5:20am EDT
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PARIS (Reuters) - French President Francois Hollande said on Wednesday he would accelerate reforms to boost growth, highlighting steps to increase homebuilding and give tax breaks to poorer households as he tries to win back voter confidence.

The most unpopular French president in modern history has come under growing fire from both the opposition and ruling Socialist party lawmakers over his economic policy. His government was forced to abandon growth and fiscal targets last week.

As he prepares for tough negotiations on the 2015 budget both at home and with France's EU partners, Hollande sought in an interview with Le Monde to explain that he would work on both fronts: reform France and help low-income households.

"We need to go faster and further," he said in the interview. "I want to accelerate reforms to boost growth as fast as possible," he said, starting with home construction.

He gave no concrete details beyond saying the plan would tackle taxation, regulatory and financing issues for construction.

Housing has become a major headache for the government, with housing starts in France down to a 16-year low - a serious drag on the economy. Property developers blame the problem partly on regulations that took effect this year to set rent limits in cities with more than 50,000 people.

Hollande also confirmed that the government would agree a replacement tax break on a similar scale to one struck down by the constitutional court earlier this month. The initial plan had been to bring lower-paid workers 2.5 billion euros ($3.33 billion) in payroll tax cuts next year.

The Socialist president also confirmed the government was working on a reform of welfare benefits for the lower paid.

Self-proclaimed "rebel" lawmakers among the ruling Socialist party say Hollande is doing too much for businesses and have become increasingly vocal ahead of the party's annual summer gathering scheduled for Aug. 30.   Continued...

French President Francois Hollande delivers a speech outside the Foreign Affairs Ministry in Paris July 26, 2014. REUTERS/Philippe Wojazer