Sarkozy pledges to axe top civil service posts

President Nicolas Sarkozy has promised to scrap half of the most senior posts in the French civil service as part of a sweeping reform of the state apparatus.

In a speech billed as a road map for the "second phase" of his economic programme, M. Sarkozy also pledged to reduce taxes, loosen the hold of the 35-hour working week and allow more French shops to open on Sundays.

The speech to the "summer university" of the French employers' federation, Medef – the first ever by a French president – was a classic Sarkozy performance. He mingled pledges of market-opening and state reforms with populist attacks on "speculative" banks and the alleged inflationary effects of the euro.

Although flagged by the Elysée Palace as a detailed guide to M. Sarkozy's economic reform programme, he mostly stuck to sweeping re-statements of his campaign speeches last spring. The principal exception was his promise to cut into the bone of the French state, which employs 40 per cent of the working population. Previous attempts to impose such biting reforms have been successfully resisted by the civil service and by trades unions. President Sarkozy said that he was "not afraid of reform of the state because we need a strong state and a state cannot be strong if it is collapsing under the weight of debt and stifled by bureaucracy".

"All structures will be simplified and all useless organisations will be abolished," he said. The two separate agencies within the sprawling finance ministry which assess and collect taxes would be merged. So would the two agencies to help the unemployed.

M. Sarkozy faces a tangle of economic problems: a slowing down of the economy, a rise in state deficits and a rise in the cost of basic products such as bread. The best way forward, he said, was to reduce taxes and loosen "disincentives" to work, such as the 35-hour week.

He took populist swipes at banks and the euro. The first were guilty, he said, of "speculating" on world markets while refusing reasonable loans to ordinary people. The European currency was, he said, clearly responsible for "real" inflation, despite all the studies which suggested otherwise.