17/01/2014 - OECD Secretary-General Angel Gurría strongly supports President François Hollande’s recently announced measures to revitalise the French economy and set it on a path towards stronger growth.
“The measures announced by President François Hollande at his press conference on 14 January 2014 are highly encouraging, both in terms of the determination shown and the substance of planned reforms. These measures are globally in line with the OECD’s recommendations, while the recognition of a general weakness on the supply side concurs with the conclusions drawn by the OECD.
The willingness to reduce employers’ social contributions, which are the highest in the OECD area as a percentage of GDP, through an essential reduction in government spending, is particularly welcome. However, the planned reduction in social contributions must go beyond the abolition of contributions to family-related benefits alone. This would make it possible to boost employment, restore business margins, finance investment and ultimately improve competitiveness. The creation of a Strategic Council to oversee cuts in public spending is also important, as it can help inform public debate and lend strong support to reforms.
Finally, the willingness to streamline France’s territorial organisation, which at present is far too fragmented, is a key component of budgetary consolidation and the drive to improve public sector efficiency. The clarification of areas of responsibility and the merging of local government bodies must include not only the regions and départements, but also the communes. Reducing State funding for local government entities which resist mergers would be a good incentive.
Implementing these plans, which will require a strong political commitment, will surely improve the performance of the French economy.”
France: Restoring competitiveness