French President Nicolas Sarkozy pledged in a grave New Year's message to find ways to pull the economy out of stagnation in the four months left before a presidential election and vowed no further public spending cuts.
Sarkozy told the nation that the worst economic crisis since World War Two would continue to hurt households in 2012 and urged people to be stoical.
He said he was intent on agreeing reforms at a January 18 meeting with unions that could bolster employment and economic competitiveness. He also said he wanted taxes on imported goods to help fund France's cherished welfare state, currently financed by company and income taxes.
I know that the lives of many of you, already tested by two difficult years, have been put to the test once more. You are ending the year more worried about yourselves and your children, Sarkozy said in a 10-minute televised speech.
The only way to preserve our sovereignty, to control our destiny, is to choose ... the route of structural reforms rather than that of impulsive actions which only add to confusion and chaos without restoring confidence.
The conservative leader is heading toward April's election trailing Socialist challenger Francois Hollande in opinion polls and with rampant unemployment, the euro zone crisis and the prospect of a sovereign debt downgrade hanging heavy over him.
Many French resent the fact that his campaign pledges of five years ago to bolster employment have come to little.
Some feel Sarkozy's past tax reforms have over-favoured the wealthy and many also dislike what they see as an impulsive and brash manner that stands out from the more austere and erudite personalities of past presidents.
Sarkozy, who is expected to confirm in late February that he will run for a second term, risks a clash in his talks with unions, who are angry they lost a 2010 fight over his reform to raise the minimum pensionable age to 62.
He hopes to agree ways to have unions and management cooperate on bringing more flexibility to the job market to stem rising unemployment, much as Germany did from 2003, but union leaders may oppose any cuts in wages.
I will listen to everyone's proposals and, before the end of January, we will take and carry out important decisions, because the stakes are high, Sarkozy said of the talks.
The president's most pressing headache remains the euro zone debt crisis, and he is due to meet German Chancellor Angela Merkel in early January to push forward a European Union agreement earlier this month for a new fiscal compact.
Having pushed through a rash of spending cuts to try to avoid slowing growth derailing deficit targets and ward off a cut to France's AAA credit rating that many now be seen as inevitable, Sarkozy said no further budget cuts were needed. The government has done what it needed to do, he said.
Sarkozy said he was convinced Europe would emerge stronger for dealing with its sovereign debt crisis, echoing remarks by Merkel in her own New Year's speech. Merkel also said EU states needed to cooperate more closely and learn from their mistakes to safeguard the euro.
Sarkozy's popularity ratings have inched up as he has shown leadership over the euro zone crisis but still stand at 34 percent in recent polls, and some two-thirds of French are unhappy with his performance.
Recent surveys show Hollande could beat him by as much as 10 percentage points in a deciding second-round in May.
(Editing by Alison Williams)