French Prime Minister Manuel Valls won a parliamentary confidence vote on his reshuffled government on Tuesday, according to the vote tally read out by the parliament speaker, reports The Globe and Mail.
The centrist Valls, who earlier said in a policy speech that France’s costly social model must be updated but preserved, secured a majority with 269 votes for and 244 against.
The number of abstentions in his ruling Socialist Party was not immediately available. Earlier, officials said they expected around 30 Socialist backbenchers in the party to abstain in protest at his plans to put through 50 billion euros of public spending taxes in the next three years while cutting taxes for business.
Earlier Tuesday, a carefully calibrated speech designed to placate his Socialist Party while pushing pro-business reforms that have earned comparisons to former British premier Tony Blair, Valls said his goal was to improve living standards for all French.
“Reform doesn’t mean destroying our social model,” Valls said of France’s highly protective labour code and a welfare state and health service among the most comprehensive and expensive in the world.
“We must adapt and reinvent this model but it’s not dead, it’s not outdated,” he added.
Valls reaffirmed plans to shave €50-billion ($65-billion) of public spending by 2017 and hand business over €40-billion in tax cuts. He called for France’s rules on worker representation – which bosses say are a cost burden – to be revamped by year's end.
But he ruled out changes to France’s 35-hour work week and cuts to the minimum wage, while promising new benefits to poor pensioners on less than 1,200 euros a month.
“We don’t do austerity,” he insisted, arguing he was not in favor of a lesser role for the state in the French economy but “a better state.”
Valls stepped up French calls for a further depreciation of the euro against the dollar and made a pointed call to neighbor Germany – whose leader Angela Merkel he will meet in Berlin next week – to do more to stimulate growth in the euro zone.
“Agreement between our two countries is vital to relaunch growth and give back real ambition to the European project,” he said, adding: “Germany must fully assume its responsibilities.”
The vote comes after France finally conceded last week that near-zero economic growth would prevent it bringing its public deficit below three per cent of output next year, the second time Hollande has broken such a promise to EU partners.
Hollande – his popularity ratings at record low levels for a modern-day French leader – is due on Thursday to hold a marathon news conference outlining plans for the rest of his five-year mandate and swatting away calls for critics for him to resign.
Financial markets and EU capitals from Berlin to Rome will look closely for clues on how fast France will enact promised new reforms on its labor market and how credibly Hollande re-commits to lowering the public deficit from its current level above four per cent.
German officials have in recent days insisted that euro zone economies can only unlock growth and hiring with a mix of fiscal rigor and sometimes painful reforms, while Valls’ Italian counterpart Matteo Renzi backs France in its quest to seek more flexibility on budget targets.
Even after winning Tuesday's vote, the Hollande-Valls duo already have a tough task convincing left-wing allies to back the plans to cut public spending through to 2017 while handing business over €40-billion in tax cuts.
They also face street protests at upcoming reforms to de-regulate tightly protected professions including notaries, pharmacists and taxi-drivers and to ease rules on worker representation in companies which bosses say are a cost burden.
Read more of this Reuters report published by The Globe and Mail.