EU: Francois Hollande lurches Right in historic U-Turn to save French economy

The Telegraph ^ | 11/6/2012 | Ambrose Evans-Pritchard

[bruinbirdman]

French president François Hollande has bowed to massive pressure for business tax cuts to pull France’s economy out of slump and stave off industrial decline, ditching a core element of his socialist platform.

Francois Hollande

Company taxes will fall by €20bn a year equal to 1pc of GDP, to be phased in gradually by 2015 under a convoluted system of rebates.

Premier Jean-Marc Ayrault said it amounted to a 6pc cut in unit labour costs, enough to close the gap with eurozone rivals. "France is not condemned to a spiral of decline, but we need a national jolt to regain control of our destiny," he said.

The mid-rate of VAT for restaurants and services will jump from 7pc to 10pc. The top rate will rise slightly to 20pc. Spending cuts will plug the revenue gap in order to meet the EU’s 3pc deficit target.

Critics call it the most humiliating U-turn in French politics since François Mitterrand abandoned his disastrous experiment of "Socialism in one country" under a D-Mark currency peg in 1983.

Mr Hollande came to office vowing lower VAT rates to protect the buying power of workers, and called business tax cuts a "gift to the rich". He imposed €10bn of fresh taxes on firms just weeks ago in his 2013 budget, a move that set off a revolt by business leaders.

[bruinbirdman]

[GeronL]

convoluted system of rebates ain’t worth spit

[Mr Ramsbotham]

Sounds like a load of hooey to me.

[GraceG]

We should have a new foreign policy in Europe, any European country who is socialist gets no more free protection from the US military.

Let the socialists starve

[bruinbirdman]

". . . . any European country who is socialist gets no more free protection from the US military"

Libération newspaper in Paris agrees:

Take advantage of US indifference

"Whoever takes the White House for the next four years, Europe must face the facts: it is no longer considered a strategic priority by the United States. Europe must therefore reinforce its common defence structures . . . ."

[Vince Ferrer]

I think President Romney needs to take a trip to the EU, along with a trade delegation, and see how many businesses he can bring over here.

[mrsmel]

S,ething about his face (perhaps the dufus glasses) reminds me of all those actors who put on a pair of specs and all of a sudden they slept at a Holiday Inn.

[sr4402]

The mid-rate of VAT for restaurants and services will jump from 7pc to 10pc.

Oh well, watch these businesses go down anyway. Who needs ratatouille anyway?

[sinsofsolarempirefan]

So he’s more of a hypocrite and less of a numbskull. Good for him...

[SunkenCiv]

Thanks bruinbirdman.

[hinckley buzzard]

They should unfetter the private sector including agriculture, then stand back and watch the economy take off. They could call it the "New Economic Plan."

[Olog-hai]

That plays right into the EU elites’ hands. They want the chance to unify all of the member states’ militaries.

[Olog-hai]

That’s about as likely as the “social market economy” being dropped from the Treaty of Lisbon. Remember that the EU also has a “Common Agricultural Policy” whose central planners dictate what should be grown where (e.g. the EU decimated Ireland’s sugar beet business via the C.A.P.) . . .