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Last Updated: Wednesday, 8 June, 2005, 17:03 GMT 18:03 UK
French PM sets out economy plans
Dominique de Villepin
Dominique de Villepin says he wants to show the way for France
French Prime Minister Dominique de Villepin has set out his plans to revitalise the country's economy and get France working again.

In his first policy speech, he said job creation was a priority. He suspended previously planned income tax cuts.

Mr de Villepin took office after Jean-Pierre Raffarin stepped down in the wake of the French public's rejection of the European constitution.

But the prime minister insisted France was still committed to the EU project.

"I'm standing before you at a very particular time of the history of our country, at a time when the French people are expressing their suffering, their impatience, their anger," Mr de Villepin told MPs.

"With you, representatives of the nation, I want to set points of reference, show the way, get France going again."

Tax decision

Focusing on employment he said 2.5m people were unemployed and yet 500,000 jobs remained unfilled.

In an apparent reference to US-style capitalism, he promised not to impose an alien culture on the French social model. At the same time, he said France must strike a balance between social protection and the need to create jobs.

Frenchmen and Frenchwomen want to remain faithful to their identity, anxious to maintain a balance between solidarity and liberty
Dominique de Villepin
French Prime Minister

To applause from the National Assembly, he announced that he was suspending income tax cuts planned by President Jacques Chirac to provide funds for the fight against unemployment.

"All spare money in the budget will be dedicated to jobs: this choice means we will have to suspend income tax cuts," he said.

Mr de Villepin announced several measures to create jobs - promising to remove red tape for small businesses, and making it easier to hire workers for small and medium-sized enterprises, especially the young and the over 50s.

He also promised to work closely with both trade unions and business leaders to try to stimulate economic growth.

The prime minister acknowledged that 10% unemployment and insecurity over jobs were two of the main reasons France voted no to the European Constitution.

Struggle ahead

He said the French "No" should not be interpreted as a sign of French isolation. He said the constitution met the expectations of some member states, but not others.

He said the French wanted "to combine the defence of our nation's interests and those of Europe, the promotion of our social model and the European project".

The BBC's Caroline Wyatt in Paris says Mr de Villepin's new government will be judged on how successful it is at tackling joblessness while protecting France's social model.

She says it was a fluent and able performance, but intermittent heckling from the opposition Socialist party suggested that this new government will have as much of a struggle with the trade unions and the left as its predecessor.

Following the speech, Mr de Villepin won a confidence vote in the National Assembly, with 363 backing the new government and 178 against.

The prime minister named his new cabinet last week, with members included to boost confidence in the government.

Mr de Villepin confirmed that his rival Nicolas Sarkozy would serve as his deputy in the new centre-right line-up, and succeed him as interior minister.

The new foreign minister is Philippe Douste-Blazy, formerly health minister.

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