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Nicolas Sarkozy reveals plan to save French economy

President Nicolas Sarkozy has unveiled reforms aimed reviving the French economy ahead of elections he is forecast to lose.

nicolas sarkozy interviewEnlarge
France's President Nicolas Sarkozy (LC) concentrates prior to the start of the one hour-long television interview with journalists Claire Chazal (2ndR) and Laurent Delahousse (R) on January 29, 2012 at the presidential Elysee Palace in Paris, focused on France's situation and broadcasted on TF1, France2, BFMTV, i-Tele and LCI television channels. (LIONEL BONAVENTURE/AFP/Getty Images)

President Nicolas Sarkozy has unveiled reforms aimed reviving the French economy ahead of elections he is forecast to lose.

The hour-long television interview broadcast simultaneously by nine channels came two weeks after France humiliatingly lost its top triple-A credit rating, Agence France-Presse reported.

Though Sarkozy, seeking a second six-year term, has yet to announce his candidacy, he is expected to face Socialist Francois Hollande, who is polling ahead in public opinion surveys. 

(GlobalPost reports: Sarkozy’s rival lays out French election battle plan)

In a move described by the Financial Times as unusual, German chancellor Angela Merkel promised to join Nicolas Sarkozy on the campaign trail in support of his "German-style structural reforms." 

To help safeguard industrial jobs in a country where recession is looming and nearly three million people are out of work — a 12-year high — Sarkozy proposed shifting a proportion of social welfare costs from companies onto consumers by reducing payroll taxes and increasing the value-added tax (VAT) to 21.2 percent from 19.6 percent. The VAT is similar to sales taxes in the US. 

According to AFP:

The German-inspired "social tax" aims to shift the burden of paying for social security from employers to consumers and help create more jobs while also making French firms more competitive.

The proposal echoes measures Germany implemented in the mid-2000s to boost the competitiveness of its industry, wrote the Wall Street Journal.

The right-wing leader also proposed reducing working time and salaries to save jobs.

With public debt at record levels, Sarkozy defended his efforts to save the euro and the French economy, saying:

"The financial crisis is calming down. Europe is no longer on the edge of the abyss... The elements of a stabilization of the financial situation in the world and in Europe are in place."

On his expected candidacy in the two-round election, to be held on Apr. 22 and May 6, Sarkozy said only that: "I have a rendezvous with the French. I will not shirk my responsibility."