France's jobless rate fell to its lowest in more than a decade at the end of 2007, official data showed on Thursday, surprising analysts who expected slower growth to brake unemployment's fall.
President Nicolas Sarkozy's centre-right government immediately hailed the figures - released three days before the first round of municipal elections - as evidence that its economic policies were working.
The jobless rate for France and its overseas provinces fell to 7.8 percent in the fourth quarter of 2007, its lowest since the series started in the first quarter of 1996 and down from 8.2 percent in the third quarter, statistics office INSEE said.
"This is really good news since we have a continued decline in unemployment," Economy Minister Christine Lagarde told i-Tele television. The opposition Socialist party responded by saying the sheer number of people retiring was enough to ensure unemployment would fall as long as the economy was growing by at least 1.8 percent. The French economy grew 1.9 percent in 2007.
The news was less upbeat on the fiscal side, with the Budget Ministry separately reporting that the central government budget deficit widened to 6.61 billion euros in January from 5.69 billion euros in the same month a year earlier. The ministry played down the significance of the data, citing the usual volatility of tax receipts and a bigger payment to the European Union budget than was made last year, when France had benefited from clawing back 2006 overpayments.
Still, economists will be paying close attention to whether the trend continues since slowing economic activity has put a question mark over France's ability to meet its promise to its European Union partners to cut its budget deficit.
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