French Socialist Says Stimulus Plan Will Not Work

`The plan is insufficient in terms of funding and it does not contain measures that will make it efficient,` Sapin told Reuters.

France's economic stimulus plan is window-dressing that will fail to stave off a surge in unemployment, the opposition Socialist Party's chief spokesman on the economy said.

President Nicolas Sarkozy announced last week a 26 billion euro ($33.6 billion) package, mostly aimed at investment rather than direct support to consumers, but Michel Sapin said only 3 to 5 billion euros was new money.

"I am deeply disappointed. The plan is insufficient in terms of funding and it does not contain measures that will make it efficient," Sapin told Reuters late on Wednesday.

The government says its proposals contain significant amounts of fresh money targeted at investment to keep industry afloat and guarantee employment.

But Sapin said the effects of the infrastructure investments announced would not be felt until months or even years down the line, when what was needed was a tangible boost now.

He said Sarkozy presented himself as a new champion of financial regulation, while on the other hand deregulating the labour market by seeking to make it easier to work on Sundays.

"We need security both in finance, which implies regulation, and in social issues, which implies regulation. We have to stop with this schizophrenia," Sapin said.

A former economy minister who now sits on the National Assembly's finance committee, Sapin was named economy secretary in the new Socialist Party executive at the weekend.

The Socialists have just emerged from a chaotic leadership contest that made them a national laughing stock for months. Sapin said with a new team now in place and an economic crisis raging, they were ready for a comeback.

"We can benefit from a contrast effect. We were so awful during our congress that now we can be excellent," he said.

SOS CONSUMERS

Sapin said a large part of Sarkozy's stimulus plan was early reimbursement of state debt due to companies or new packaging of measures that were going through parliament and whose funding was already in the pipeline.

"That's why I say it is window-dressing," he said.

He pointed to stimulus efforts in Britain and Spain as better models, saying those countries had struck a balance between encouraging investment and helping consumers through measures like cutting Value Added Tax and other taxes.

The French government says the budget deficit will swell to 3.9 percent of gross domestic product next year, well above the European Union's 3 percent limit. Sapin said he expected an even bigger deficit, though he declined to give a figure.

He said if in charge, he would have earmarked 25 to 30 billion euros in new funding for stimulus measures and funded it by repealing tax cuts introduced by Sarkozy in 2007.

The fiscal package costs the state some 15 billion euros a year and Socialists charge that the main beneficiaries are the rich. The government disputes that and says the package injected at least 7 billion euros into the economy this year.