France urged to cut its spending

Trichet says the French labour market is too inflexible

The President of the European Central Bank, Jean-Claude Trichet, has urged France to reduce its public spending.

Giving evidence to a commission in Paris set up to boost economic growth, Mr Trichet said France was "not in the right frame in terms of efficiency".

He said that in 2007, public spending in France would be the heaviest as proportion of gross domestic product (GDP) within the European Union.

Mr Trichet said France had the highest unemployment level in the eurozone.

For older people, he said the jobless rate was "ridiculously low" and he called for greater flexibility in the labour market, along the lines of Denmark and the Irish Republic.

Number one spender

He told the commission he could see no substantial reason why France should have higher spending than Germany, relative to its GDP.

Mr Trichet was governor of the Bank of France during the 1990s. Two months ago, he warned that France was well on the way to becoming Europe's "number one spender" in 2007.

He was due to hold talks with President Sarkozy later on Thursday evening.

Mr Sarkozy established the commission under the leadership of Jacques Attali, a close ally of the late Socialist President, Francois Mitterrand.