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Hollande allies hail new 'social democrat' vision

French President Francois Hollande answers a question during a news conference at the Elysee Palace in Paris, January 14, 2014. REUTERS/Phil
French President Francois Hollande answers a question during a news conference at the Elysee Palace in Paris, January 14, 2014. REUTERS/Phil

By Mark John

PARIS (Reuters) - Francois Hollande's allies dismissed on Wednesday suggestions the Socialist French president had lurched right with plans to cut public spending and the taxes on business, hailing what they called a new "social democrat" vision.

Hollande brushed aside questions about his personal life at a marathon news conference on Tuesday in which he set out plans to find at least 50 billion euros of spending cuts between 2015-2017 and reduce corporate charges by 30 billion euros.

That prompted an onslaught of criticism from France's hard left, which accused of him of a sell-out, and even from the far-right National Front's Marine Le Pen, who accused him of converting to "ultra-liberal" economics.

"It's called social democracy ... and social democracy is on the left," Finance Minister Pierre Moscovici, one of the main centrist figures in Hollande's Socialist Party, told LCI television.

"What is being proposed is a social compromise ... it is an acceleration, an amplification of our line," he replied when asked if Hollande - who in his 2012 campaign called the world of finance his "enemy" - had committed a U-turn.

Social democracy is the term used to describe the goal of creating welfare structures and social solidarity within a capitalist economy. It is employed most notably in Germany in the name of the main party of the left.

For over two-and-a-half hours on Tuesday, Hollande batted away questions about a celebrity magazine's revelations of a liaison with a French film actress and the future of his relationship with official partner Valerie Trierweiler.

The setpiece event was intended to expand on Hollande's conviction that "supply-side socialism" is needed to reform the euro zone's second largest economy while preserving a generous welfare model cherished by most French.

"A U-turn of words", the right-leaning Le Figaro newspaper said in its Wednesday edition. "Hollande set free", the left-wing Liberation daily said.

Left Party leader Jean-Luc Melenchon accused Hollande of offering "unreciprocated gifts" to France's company leaders, but Hollande allies insisted the country's main employers' group Medef had promised to hire more if charges were cut.

"Increasingly Jean-Luc Melenchon gives the impression of someone who wants the left to fail rather than succeed," Budget Minister Bernard Cazeneuve told iTele of the firebrand orator.

Independent economists have given a mitigated thumbs-up to Hollande's plan, welcoming his recognition of the need to cut public spending but questioning whether the volume of cuts will be actually delivered and sufficient to mark a change.

"2014 could be a window of opportunity for Hollande," said Christian Schulz, senior economist at German bank Berenberg.

"Convincing the left wing of his party and the unions of the need for supply-side reforms should be easier in times of high unemployment and economic underperformance," he added.

So far, there has been no clear sign of a revolt from the left of Hollande's Socialists.

Whereas Germany's Social Democrats disavowed Marxist policy at a 1959 conference in the Rhineland town of Bad Godesberg, France's Socialists have never had such a moment and remain a broad grouping in which centrists rub shoulders with staunch left-wingers such as Industry Minister Arnaud Montebourg.

(Additional reporting by Stephen Brown in Berlin; Editing by Giles Elgood)

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