March 28 (Bloomberg) -- French Prime Minister Jean-Pierre Raffarin's ruling coalition suffered a crushing defeat in the regional ballot as voters showed their unhappiness with rising unemployment and health-care costs.
Socialist-led alliances won 21 of 23 regional assemblies, Interior Minister Nicolas Sarkozy said, citing available results from France's 26 regions. That's up from the nine councils won by the Socialists in 1998 and highlights the extent of the loss suffered by the governing coalition, which had controlled 15.
"The message is far too clear for the president to ignore," Stefan Collignon, who teaches international politics at the London School of Economics, said in a telephone interview.
The scale of the ruling coalition's losses makes it likely President Jacques Chirac will next week reshuffle Raffarin's two-year-old government, reducing the number of ministers and bringing more professional politicians into the cabinet, said academics such as Laurent Dubois of the Paris Institut d'Etudes Politiques.
The government needs to "draw lessons from this, nationally," Raffarin said in a nationwide address. "We need to be more effective and fair. Changes are needed."
Concern over a 9.6 unemployment rate and discontent over budget cutbacks have fueled opposition to the government, headed by the 55-year-old Raffarin and installed two years ago by President Jacques Chirac, 71. Pledges to balance health-care finances by 2007 threaten to deepen their unpopularity with tax increases and scaled-back benefits anticipated.
Today's defeat "wasn't about personalities, but policies," said former Prime Minister Alain Juppe, who also suffered an election defeat in 1997 for his measures to cut the public deficit and permit France to qualify to share the euro.
First Test
The regional vote was the first test of Chirac's popularity since he won a second term in May 2002. Aside from European Parliament elections in June, it's the last until the next presidential and parliamentary elections in 2007.
Chirac may need to reshuffle the cabinet to show that he's heeding voters' discontent, Pierre Giacometti, head of Paris-based Ipsos SA polling firm said last week.
Raffarin has said that he wants a smaller cabinet consisting only of professional politicians, heralding the departure of members such as Health Minister Jean-Francois Mattei, a doctor. Finance Minister Francis Mer and Education Minister Luc Ferry are other candidates for replacement, Giacometti said.
France's economy expanded at 0.2 percent last year, its slowest growth in a decade, and the unemployment rate is close to a three-year high. While growth has picked up, the economy probably won't start creating jobs until the second half of the year, according to government estimates.
This month, several hundred state-employed scientists resigned, while hospital workers demonstrated and teachers' unions went on a daylong strike, all seeking to highlight their opposition to budget cuts that they say have worsened their working conditions.
'Reform Must Continue'
Raffarin is aiming to trim a widening budget deficit as the shortfall last year widened to 63.4 billion euros ($77.8 billion) or 4.1 percent of gross domestic product. Shoring up health-care finances is key to the government's deficit reduction efforts after exceeding the European Union's 3 percent limit for the past two years.
The government estimates a 10.9 billion euro ($13.4 billion) health-care deficit this year. Officials have already raised hospital and doctors' consultation fees and cut drug reimbursement.
President Chirac has pledged to balance health-care finances by 2007, enabling France to lower its deficit to the ceiling permitted by European Union rules as early as 2006.
"Reforms must continue because they are necessary," said Raffarin, adding that "it won't be without difficulty."
First Round
Today's vote would mark the second advance this month by European Socialists as growth among the 12 nations that share the euro currency slows. Socialists in Spain won a surprising victory in parliamentary elections after the March 11 terrorist attacks that killed 190 people in Madrid.
Last Sunday's first-round ballot, which eliminated minority candidates, saw 40 percent of voters back Socialist-led groups, compared with 34 percent for Raffarin's coalition. Today, the Socialists took almost 50 percent of the votes to less than 38 percent for the government, the interior minister said.
The anti-immigration National Front of Jean-Marie Le Pen picked up less than 14 percent of the nationwide vote, down more than 3 percentage points from the 2002 presidential election. It didn't take control of any regional council.
Among the assemblies to fall into the hands of the parliamentary opposition was Poitou-Charentes, the region Raffarin himself chaired for 14 years before his appointment as prime minister two years ago. TNS Sofres projects that the only region has coalition parties will retain is Alsace.
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Simon Packard in Paris packard@bloomberg.net
To contact the editor of this story:
Vidya Root at vroot@bloomberg.net
Catherine Hickley at chickley@bloomberg.net
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