Hollande vows to 'go on offensive', push euro government

(PARIS) - Embattled President Francois Hollande vowed Thursday to "go on the offensive" by pushing for a new eurozone government and tackling France's economic woes after the country fell into recession.

During a wide-ranging press conference, Hollande promised measures to combat rising unemployment and boost investment in France, as well as initiatives to reform Europe and foster growth in the 17-nation eurozone.

"I am well aware that there is a recession, that unemployment is rising," Hollande told hundreds of journalists and officials on the day after the first anniversary of his inauguration.

"Year Two must be about going on the offensive," he said, sticking to a promise to reverse France's rise in joblessness by the end of 2013.

Hollande promised to launch an initiative to kickstart reforms in Europe and bring closer political union within the bloc in two years through a eurozone government with its own president and budget.

"If Europe does not advance it will fall or even be wiped from the world map.... My duty is to bring Europe out of its lethargy," he said.

"Europe is being hit by a recession caused by austerity policies," he said.

The first anniversary of Hollande taking power was marred by news that the French economy had fallen into recession in the first three months of 2013 after two consecutive quarters of contraction.

The Socialist leader is under increasing pressure to address France's declining economic fortunes -- blamed by many on a lack of competitiveness -- and to tackle a 16-year high in unemployment.

Elected on a wave of optimism last year, Hollande has seen his approval ratings fall further and faster than any other president in modern French history.

Hollande is facing mounting pressure for a cabinet reshuffle, with even his Foreign Minister Laurent Fabius complaining this week of the finance ministry lacking a proper "boss".

Hollande insisted a reshuffle was "not on the agenda" and said Prime Minister Jean-Marc Ayrault has "all of my confidence for the coming months".

The recession has been blamed on falling household consumption, which suffered its most significant drop in 30 years in 2012, and a fall in exports in the first quarter of this year.

It came as the eurozone also saw its recession deepen on Wednesday, posting its sixth straight quarter of economic contraction.

Hollande outlined four measures to reform Europe, including the creation of an "economic government" that would have a president, meet every month, debate economic policy and harmonise tax systems.

He also vowed to push for the immediate release of six billion euros in European funds for youth jobs, to press for European investment in industry and to promote a coordinated energy policy.

He said he would work with Germany to push reforms, brushing aside recent tensions between Paris and Berlin.

"France and Germany have the duty to move Europe forward. Because if Europe stays in its current state, that could be the end of the European idea," he said.

Hollande said France would seek to convince foreign investors to take part in a 10-year plan to boost investment in four key sectors: the digital industry, energy transition, health and transport infrastructure.

He defended his first year in office, saying the government had laid the groundwork for reining in public finances and re-starting growth.

He also paid homage to French soldiers serving in Mali, where Paris sent troops earlier this year to intervene against Islamist rebels who had seized control of the north.

Hollande said the intervention had "made France loved in all of Africa" and highlighted "the role of a great nation that has the power to have its influence felt in the world."