Faced with France’s notoriously rigid economy and determined to liberalise it, Nicolas Sarkozy’s recipe for doing so will, it seems, have a rich, varied and not always complementary list of ingredients. Whether it will be to everybody’s taste only time will tell.

According to economists, Mr Sarkozy’s programme as would-be French leader on the stump and now president-elect contains a disparate array of measures ranging from Reagonomics to old-fashioned Gallic dirigisme.

“He is very liberal and at the same time very Gaullist,” Henri Sterdyniak, an economist at the French Observatory of Economic Conjuncture, said.

A champion of tax cuts and increased labour market flexibility, the 52-year-old politician of the Centre Right is also known for his willingness to tinker with industry and his penchant for protectionism.

He believes that he can move in both directions, adapting the economy to globalisation while meeting the widely held demand for a strong, interventionist French State.

After 12 years of low growth and high unemployment under President Chirac, Mr Sarkozy’s main challenge will be to drive through a raft of reforms, despite the inevitable opposition of his country’s powerful unions.

At the heart of his programme is a pledge to “restore the value of work” in a country where the legal maximum working week is just 35 hours. He has promised to maintain this ceiling, but will encourage workers to put in overtime, which will paid at a statutory 25 per cent above the standard rate and not be subjected to income tax. Mr Sarkozy hopes that these measures will boost growth, which is expected to reach 2.3 per cent this year.

He is also planning a highly sensitive labour market reform, with the introduction of an employment contract that makes it easier for businesses to shed staff. However, the scope and timescale of this, which is certain to be fiercely contested by the unions, are in doubt after Mr Sarkozy backed away from an initial hard line during the election campaign.

The latest version of the proposal appears to suggest that the revised employment contract could be terminated only with the employee’s consent, comforting rather than overturning the status quo.

Mr Sarkozy has adopted a more genuinely radical approach to the tax burden, which he promised to reduce by four percentage points over ten years, costing the State’s coffers €68 billion (£47 billion). The cuts could take France over the 3 per cent deficit threshold fixed by the European Union for members of the eurozone, but Mr Sarkozy appears to be willing to confront the European Commission over the issue, arguing that tax cuts will be the prelude to a growing economy.

As part of an overhaul designed to bring France in line with average rates across Europe, he is also planning to reduce the corporate tax rates from 33 per cent to 28 per cent.

In a gesture to the anticapitalist Left, he said that the rate could fall where companies invest in research or pay increases, and foreshadowed new legislation to cap golden handshakes for failed managers and rise where they pay out dividends to shareholders.

Seven steps to economic reform

1 Reduction of French debt to 60% of national wealth by 2012
2 Tax shield to limit personal taxes to 50% of revenue
3 Reduction of public sector through nonreplacement of 50% of retiring civil servants
4 Public spending rises limited to 1.8% a year
5 €15 billion for research over five years
6 Deprive the unemployed of benefit money if they refuse two job offers
7 Secret ballots on strikes after eight days of action

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