Mr Sarkozy insists he is determined to get the job done

Mr Sarkozy predicted the budget deficit would return to eurozone norms - 3% of gross domestic product - by next year.

"France's word must be respected," he told a news conference.

Mr Sarkozy was handed France's finance and economy portfolio, with a brief to trim the budget without stirring up popular opposition to reform.

Mr Sarkozy's predecessor, Francis Mer, took the blame for a raft of unpopular cut-backs, in particular to France's expensive welfare and pensions systems.

Speeding up

The key to Mr Sarkozy's approach to France's public finances is an assumption of a recovery in economic output.

After growing by just 0.5% last year, the economy is now predicted to accelerate to 1.7-1.8% growth in 2004, Mr Sarkozy said.

He has earmarked half the extra revenues this growth should produce to pay off state debt, which is currently 64% of GDP.

He intends to introduce a law this year, which will oblige governments to use any surplus tax revenues to redeem France's debt.

Weak state finances are a disincentive to investment, he said, and have made the French economy especially sluggish.

Cutting back

At the same time, he has remained cautious about promising the sort of sweeping spending cuts some economists have called for.

France needs to reduce its budget deficit from the current 4.1% of GDP to below the eurozone ceiling, or face statutory penalties.

Mr Sarkozy pledged a freeze on spending this year and next, and in particular promised to cut state aid to companies that move jobs abroad.

The state is to sell up to 600 tonnes of the Bank of France's gold reserves - an amount that is worth some $7.5bn at current prices.

Privatisation is to speed up, too, with the sale of 35% of aero-engine maker Snecma this summer, and the partial sell-offs of motorway operators Sanef and SAPRR.

"We must act, and act quickly," he said.

"I will fight on all fronts simultaneously."

Two cheers

Observers are still divided on whether the French government is pursuing the right fiscal policy.

Many insist its forecasts of economic growth are overly optimistic, even given promises to stimulate consumer demand through tax breaks.

Mr Sarkozy has earned plaudits for launching a range of incentives to take out loans for home-improvement and other investment, an effort to free up some of the country's rapidly accumulating savings.

But as far as balancing the books is concerned, there is concern about whether the few sell-offs announced so far will be enough to make a dent in the deficit.

Mr Sarkozy has made no announcement so far about his intentions for Electricite de France and Gaz de France, the mammoth state energy enterprises which are seen as the ripest source of government revenue.