On Sunday, French President Nicolas Sarkozy used a primetime television interview to outline fresh new measures aimed at supporting employment and boosting competitiveness to support growth, a move that aims at winning public support ahead of nearing presidential election in April.
Sarkozy announced an increase in the sales tax (VAT) by 1.6 percentage points to 21.2% from 19.6% from October and will use the proceeds to cut social charges and cut payroll charges paid by employers to support the labor market.
He also would set up an industrial investment bank in February with an initial billion euros in capital that will lend to small and medium sized businesses that are currently struggling to allocate finances especially amid the financial stress and weak growth environment.
Among other measures, Sarkozy said that companies employing more than 250 people would have to take interns up to 5.0% of the total staff.
As for the other measure, Sarkozy intends to go forwards with the financial transaction tax that the United Kingdom strongly objects at an EU level. Sarkozy did not provide many details on the tax but said the plans for August would set 0.1% tax on transaction in French securities.