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Sarkozy says financial crisis subsides

(Xinhua)

08:11, January 30, 2012

PARIS, Jan. 29 (Xinhua) -- French President Nicolas Sarkozy said Sunday night that the spiraling financial crisis subsided as efforts to restore stability in the eurozone "bore fruit".

"Today, with caution, I think we can say that the elements of financial stability in the world and Europe are placed. The adopted measures had contributed to the stability," Sarkozy said in a TV interview to unveil his economic reform measures.

"The financial crisis subsides. Europe is no longer at the edge. We must now devote all our efforts to solve the economic crisis," he added.

Sarkozy's TV address came just less than three months before the French presidential elections although the incumbent president has yet officially announced his candidacy.

In a one-hour's TV interview, the French president refused to say whether he was running for presidential election scheduled for April, instead, he outlined a series of "strong" measures for fighting against unemployment and enhancing France's economic competitiveness amid a long-running eurozone crisis and what many economists believe is a mild recession in France.

Among the "strong" measure, Sarkozy announced an increase of 1.6 percent in value added sales tax (VAT) rate to stand at 21.2 percent starting from Oct. 1, aiming to reduce employers' contributions, and the creation of a 1-billion-euro (some 1.32 billion. U.S. dollars) bank to inject new blood into small and medium enterprises in February.

He also said to impose 0.1 percent tax on financial transitions for listed companies in France in August to "finance deficits."

However, the VAT reform is challenged by many critics, with a risk of inflation and the declining of purchasing power. But Sarkozy insisted that the reform will reduce labor costs and enhance competitiveness.

Analysts said an unprecedent more than one-hour live broadcast TV interview on the country's main four channels is a part of Sarkozy's implicit campaign to regain voters' confidence after a "failed policy" which fuelled unemployment and decelerate growth.

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