Post affair revelation, Francois Hollande bids to deflect glare from private life to reforms

President Francois Hollande aims to discuss the French economy on Tuesday but a news conference is likely to be dominated by talk of his private life, after his partner went into a hospital to recover from the shock of reports he had an affair.

His New Year's encounter with journalists in his Elysee Palace will be the French leader's first public appearance since a celebrity magazine on Friday published photos it said showed Hollande making a nocturnal visit to an actress. His office complained of breach of privacy but did not deny the affair.

The saga took a surprise new turn on Sunday when it emerged that his long-term partner, Valerie Trierweiler, had been admitted to hospital in a state of shock.

The scandal threatens to undermine the authority of Hollande, a Socialist who has already become the least popular French president in modern times, even as he aims to revive a stalled economy by cutting taxes on business, a lurch to the political centre that has irked unions and left-wing allies.

"This major political event must remain a major political event," David Assouline, spokesman for Hollande's Socialist party, said of the 1530 GMT news conference, an annual setpiece which could last as long as two hours.

Rivals also said the scandal should not take the president's focus off of policy announcements: "This is not a soap opera," Jean-Louis Borloo, leader of the centrist UDI party, told BFM television.

"With nearly a third of his mandate gone, it's about time he seriously laid out how he plans to turn the country around - even if it's not exactly going to be rock 'n' roll." Hollande plans to use the event to detail a proposed "responsibility pact" with business in which firms will be offered tax cuts and less red tape in return for hiring commitments aimed at reducing 12 % unemployment.

But the reports of the affair are likely to hijack the agenda. A similar event staged by predecessor Nicolas Sarkozy after his 2007 divorce was dominated by curiosity over his romance with singer Carla Bruni, whom he subsequently wed.

While a poll at the weekend showed four-fifths of French voters considered the matter a private affair for Hollande and his family, the news of former journalist Trierweiler's admission to hospital prompted critics to break their silence. "This has been disastrous for the image of the institution of the presidency," said Jean-Francois Cope, head of the opposition UMP conservatives.

Reform window tight 

Although France does not have an official First Lady title, Trierweiler has her own office in the Elysee, a chauffeur and adviser, and accompanies Hollande on visits. Many pundits say it is legitimate now to question what her actual status is.

"She knows it must be cleared up because the debate has turned political," Frederic Gerschel, a reporter for daily Le Parisien, told RTL radio after speaking to Trierweiler. Her office said she would remain in hospital for the time being.

"She needs to recover after the shock she suffered. She needs peace and quiet," an aide said. Worries are growing in the euro zone that France, its second-largest economy, will hold back a nascent recovery - fears borne out by December manufacturing data that showed a strong pick-up in most countries except France.

"It's not enough. The president's message in his New Year's address is to accelerate, because 2014 must be the year of results in terms of overall economic policies," Trade Minister Nicole Bricq said.

France's blue-chip CAC 40 stock index - home of bellwethers such as drugmaker Sanofi, cosmetics group L'Oreal and oil major Total - is down 0.8 %, the worst performance among European bourses in 2014.

Philippe Varin, chief executive of troubled carmaker PSA Peugeot Citroen, urged Hollande to cut taxes on companies and to follow countries such as Canada and Sweden in making welfare spending more efficient.

"(For growth) you need improved competitiveness, which is only possible with better corporate margins which in turn are crucial for investment and therefore job creation," Varin told Le Figaro newspaper.

Analysts are for now sceptical about whether Hollande is really ready to act on his acknowledgement that France's high public spending and taxation are restraining the economy and the creation of new jobs. They point to local French elections in May and European Parliament polls two months later as limiting his room for manoeuvre on painful measures to cut public spending, currently around 57 % of output.