PARIS - France's Socialist president-elect Francois Hollande may use a summer audit of state finances to water down his generous campaign promises rather than risk a backlash from financial markets against stubbornly high deficits and rising debt. Advisers say he could even freeze some spending if the review turns up any nasty surprises, soothing investors who are worried he has become the figurehead for a fight against German-imposed austerity in the euro zone. Hollande, due to take office next week after toppling President Nicolas Sarkozy in Sunday's election, dismayed analysts with his campaign spending promises, such as hiring 60,000 school staff and creating 150,000 state-aided jobs. France already has one of the highest levels of public spending in Western Europe, at around 55 percent of GDP, and has not balanced its budget since 1974. But Hollande, a 57-year-old graduate of France's elite ENA civil service school, together with other Socialist leaders has already been discretely preparing the ground to play a more cautious game. "There are certainly deficits, things hidden in the shadows," Jean-Marc Ayrault, the Socialists' parliamentary leader and a candidate for prime minister, said of the audit. "We will discover the reality and strike a balance between fostering growth and making the necessary efforts to reduce the debt." Those close to Hollande are now urging him to use the review by the country's top audit body, the Cour des comptes, as a justification for lowering his growth forecasts for the euro zone's No.2 economy, widely seen as too optimistic. Advisors are pressing him to pare back spending in certain areas, particularly the deficit-ridden social security system, and to raise taxes by eliminating widespread exemptions and raising the CSG welfare charge on income and capital revenues. "There are holes in the program on the spending side and we will be obliged to take action," said one long-standing advisor, who asked not to be identified. The situation is delicate for Hollande after he promised change to voters tired of unemployment running at 12-year high of nearly 10 percent and talk of spending cuts. Sarkozy, despite his tough rhetoric, took only tentative steps to putting France's finances on an even keel and the country was stripped of its prized triple-A credit rating by Standard & Poor's on his watch.
