France striving for pragmatic capitalism: Lagarde

‘I often hear that France refuses capitalism. I don’t believe it,’ Lagarde told an economics conference in the south of France.

She said measures which will be presented to parliament next week, including a plan to offer tax breaks for overtime pay, were aimed at enticing people to work and rehabilitate a success ethic in the euro zone’s second biggest economy.

Lagarde also repeated the government’s intention of reducing unemployment, clamping down on state spending, and reforming the pension system during President Nicolas Sarkozy’s five-year mandate. She did not spell out specific measures.

Sarkozy angered some EU partners last month when he insisted that ‘free and undistorted’ competition should be removed as one of the EU’s stated aims, sparking accusations that he wanted to promote old-fashioned protectionism.

Looking to explain France’s position, Lagarde said Paris was not willing to leave everything to market forces and that state’s role was to regulate against excess.

She suggested that the powers of the French market regulator, the AMF, should be reviewed and reinforced.

Addressing the same conference, World Trade Organisation chief Pascal Lamy said certain aspects of the French economy were highly globalised but that there was often social and political resistance to capitalism.

‘France is capitalist in its body, not in its head,’ Lamy told the conference.