CHOLET, France: French President Nicolas Sarkozy on Wednesday said the strength of the euro risks handicapping European companies as they recover from the global recession.
The competitiveness of companies such as Airbus, a major European employer whose costs are in euros but sells in dollars, is hurt when the euro appreciates, Sarkozy told French business leaders in Cholet in western France.
Earlier, at a meeting with workers at French electronics company Thales, he called the exchange rate a “considerable problem.” The euro, used by 16 European nations, bought $1.43 in European trading Wednesday.
Pressure may ease up on the euro in 2010 as investors believe the US Federal Reserve will start raising interest rates from their current record lows sooner than many of its peers. Concerns about the level of borrowing in a number of euro zone countries, particularly Greece and Ireland, have also helped contain the euro’s strength.
Over 2009, the euro fluctuated in a fairly wide range from below $1.25 to above $1.50.
In the French president’s traditional New Year’s address to top business figures, Sarkozy defended his record during the financial crisis and said his priority for 2010 will be jobs. He vowed not to raise taxes despite record debt and deficit levels, saying it would be anti-competitive.
France is one of the most heavily taxed countries in Europe, and the answer to controlling the budget gap is cutting spending, he said.
“I have refused to increase taxes and I will continue to refuse any increase in taxes,” he said.
France spent 27 billion euros last year fending off the worst of the global recession, helping the auto industry with a cash-for-clunkers scheme and injecting emergency funds into banks to encourage lending.
Sarkozy also called Wednesday for a carbon tax across Europe and punitive tariffs on products that fail to meet climate standards.
“We will not accept goods that fail to conform to our environmental standards,” Sarkozy said.
“In future we will levy a ‘climate tax’ at Europe’s borders,” said the president, adding that he wanted to see an end to so-called eco-dumping.
Sarkozy’s own plans for a carbon tax were dealt a blow last week when France’s Constitutional Council ruled that it cannot come into force, as it includes too many exemptions. The president said he expected to see a revised version ready in June.