Sarkozy vows budget surplus, debt cut if re-elected

PARIS (Reuters) - President Nicolas Sarkozy pledged to achieve a budget surplus for the first time since 1974 and cut France's swelling debt if re-elected on May 6, warning that his Socialist rival would lead the country towards the fate of Greece or Spain.

Presenting an austere manifesto less than three weeks before the first round of voting on April 22, Sarkozy said he would put a "golden rule" to parliament in July committing France to balance its budget as promised to its European partners.

"Some countries in Europe are on the edge of a precipice today. We cannot refuse to make the historic choice of competitiveness, innovation and reducing public spending," said the conservative incumbent, who trails Socialist Francois Hollande in all polls for the decisive run-off.

"To depart even slightly from the commitments France has made would mean a crisis of confidence," he said, adding that recent events had shown that countries could go bankrupt and face mass unemployment.

Sarkozy, who presided over an explosion of the debt and deficit after the 2008 financial crisis, said his programme would generate a budget surplus of 0.5 percent of gross domestic product in 2017 after achieving balance in 2016, and public debt would fall to 80.6 percent from a peak of 89.4 percent in 2013.

He said he was sending out a 36-page letter to the French people, setting out his promises in writing. The aim was to reconcile supporters and opponents of European integration and winners and losers of globalisation.

Sarkozy also called for a mass rally of the "silent majority" to support him on Paris' central Place de la Concorde on April 15 - a week before the first ballot.

"RETAKE THE BASTILLE"

He seemed to be trying to emulate hard-left candidate Jean-Luc Melenchon, who has stormed to third place in some opinion polls after leading a march of tens of thousands of leftists to "retake the Bastille" last month, symbolically re-enacting one of the high points of the 1789 French Revolution.

Hollande said he would order an audit of public finances if elected, a day after he set out his own 60-day programme of the first emergency economic measures.

"We'll have the Court of Auditors carry out an evaluation immediately ... and freeze certain spending once we have the results," Hollande said in an interview on Canal+ television.

The move appeared designed to prepare the ground for austerity measures that could be blamed on his predecessor's stewardship of France's debt and deficit.

The battle over debt and deficit came after a cover story in the Economist weekly entitled "France in Denial" made waves in political circles by accusing both leading candidates of lacking serious ideas for tackling the country's economic and fiscal problems.

Sarkozy said Hollande's plan to immediately lower the retirement age back to 60 from 62 for people who started work at age 18 or younger showed it was the Socialist who was in denial.

"That proposal alone is a negation of the existence of the crisis, and the existence of an outside world," he said.

Earlier, Foreign Minister Alain Juppe, tipped as a possible prime minister if Sarkozy wins, said Hollande's economic and European plans were an "explosive cocktail" that could derail Europe's exit from its debt crisis.

He called the Socialist's plans to freeze fuel prices and boost family welfare payments short-sighted and said his plan to renegotiate a European treaty on budget discipline would inject new uncertainty into nervous financial markets.

"EXPLOSIVE COCKTAIL"

"The cocktail of these two measures, the immediate spending without savings, in other words slippage in our public finances, and secondly, throwing the EU treaty into question, could cause the system to explode," Juppe said.

Latest opinion polls show Sarkozy slightly ahead or level with Hollande in the first round, with Melenchon edging ahead of far-right candidate Marine Le Pen for third place and centrist Francois Bayrou losing ground in fifth. But all show Hollande ahead with at least 53 and up to 56 percent of voting intentions for the decisive second ballot.

Sarkozy is convinced he can still win as centrist and far-right voters will rally behind him in round two.

The Socialists derided Sarkozy for waiting until so late to produce a comprehensive manifesto.

"It's not very serious," said Socialist Party chief Martine Aubry, who made a point of noting that Hollande had presented a fully costed manifesto in January.

"Sarkozy's programme is his record of the past five years, only worse," said Hollande, whose main line of attack is that the wealthy rather than the needy were the big beneficiaries of tax giveaways since 2007.

The Socialist candidate, who proposes hiring 60,000 school staff and creating 150,000 state-aided jobs if he wins power, said he hoped to ensure recruitment of 4,000 school support staff before next September's start of a new academic year.

In a symbolic show of support for Hollande, his former partner Segolene Royal, who was the unsuccessful Socialist presidential candidate in 2007, joined him on stage as co-star at a rally in the city of Rennes on Wednesday night.

She and Hollande's current partner, journalist Valerie Trierweiler, shook hands in a display of conciliation.

"The most noble way to make history is to back the person who's best placed to win," said Royal, who lived with Hollande for a quarter of a century and had four children with him.

(Additional reporting by John Irish; Editing by Paul Taylor)