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UPDATE 2-France's Hollande clings to jobs goal as voters lose faith

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(Globalpost/GlobalPost)

* Hollande admits French public deficit is way off target

* President reaffirms jobs pledge but economists sceptical

* Heckled on two-day walkabout meant to repair image

By Julien Ponthus

DIJON, France, March 12 (Reuters) - French President Francois Hollande, battling to appease voters as his economic goals recede, loosened a budget target for 2013 on Tuesday but clung to his pledge to end a jobs crisis.

On a two-day trip on Tuesday to eastern France aimed at convincing a sullen public he can restore the economy to health, Hollande admitted that deficit-cutting has been blown off course but said a delayed target was preferable to austerity measures that could stifle economic recovery.

He said the end-2013 public deficit should come in at 3.7 percent of gross domestic product, as the European Commission is forecasting, a far cry from his initial 3 percent goal.

But Hollande insisted that he can reach his last standing goal, to reverse by end-2013 a rise in unemployment that has taken the rate to a 13-year high of 10.6 percent.

"The right economic strategy is to stay on this track without doing anything that can weaken growth," Hollande told a meeting in Dijon, capital of the Burgundy wine-making region.

On his pledge to halt the jobs crisis, he said: "I will use every lever I can to achieve this aim of reversing the trend in unemployment."

Confidence in Hollande has dropped to the lowest level in 30 years for a French leader just 10 months into his presidency.

As anaemic growth thins state revenues and left-wingers fume at the focus on spending cuts, the Socialist government said this week it will demand another 5 billion euros ($6.5 billion) in cost cuts at ministries this year.

Hollande has yet to acknowledge that the goal closest to voters' hearts is also likely to elude him.

The Commission sees French unemployment, currently at 10.6 percent, rising further this year and hitting 11 percent in 2014. Analysts also see no reason for the jobless rate to fall.

With Hollande bound to address the issue in a televised message to the nation later this month, his aides seemed to be preparing the ground by explaining that his pledge should be read as halting the rise in unemployment, not turning it around.

"It's about reaching a plateau," one presidential advisor told Reuters.

SOS CALL?

Opposition UMP politicians poured scorn on Hollande's "meet-and-greet" Dijon trip, scheduled as his approval ratings hit new lows below 30 percent in early March. Lawmaker Franck Riester called it "the SOS call of a captain in distress".

Hecklers on the tour shouted: "What happened to the promises?" and "We've been waiting six months for a change!" Images of one of them being dragged off by police jarred in what was billed as a warm outing with no crowd barriers.

In a rough Dijon suburb with a 32 percent unemployment rate, Hollande told locals at an indoor climbing wall on Monday that he would restore employment step by step, like a rock climber.

The Socialist-controlled parliament is due to pass legislation next month based on a labour accord reached between employers and three mainstream trade unions to make it easier for firms to cut work hours and pay in downturns.

While hard-left lawmakers oppose the law, it is in line with what economists advise to boost hiring in the long term - but probably not this year, when the government has admitted the economy will likely grow just 0.2 to 0.3 percent, well below the 0.8 percent budget assumption.

"If we wait a few more months, official communications will fall in line with reality," said Bruno Cavalier, economist at Oddo Securities.

http://www.globalpost.com/dispatch/news/thomson-reuters/130312/update-2-frances-hollande-clings-jobs-goal-voters-lose-faith