France's central bank head warns FTT could 'destroy' jobs Sir Mervyn has hinted that Europe would use delaying tactics to kick the FTT into the long grass. German finance minister Wolfgang Schäuble fuelled the speculation earlier this month by playing down the significance of the tax. We are just beginning this discussion. It is not a major concern to be very frank," he said. This year, next year ... it's not (a) major problem. Mr Noyer's warning was part of a broad statement on the looming crisis in France, which he said was facing a second consecutive year of stagnation. The economy is forecast to shrink 0.1pc this year after flatlining in 2012. Bold reforms are needed to combat decline and eliminate the structural budget deficit on target by 2016 - one year earlier than the UK. The underlying objective is growth. Not just a temporary spurt, sustained artificially by public spending, but strong and lasting growth," Mr Noyer said. This kind of growth cannot just be summoned up. It requires a profound change in public policy. Having raised taxes, President François Hollande's government now needs to cut spending, Mr Noyer stressed, suggesting unpopular reductions to pensions and welfare as well as the public sector workforce and pay. "Welfare spending accounts for around 30pc of GDP and the country's social deficit path is unsustainable as it stands," he said. Initially, efforts were focused on increasing taxes and social contributions in order to generate rapid results. However, the government now needs to concentrate on public spending to meet its target, as the tax burden has reached a very high level and any further increases in employer contributions would lead to a new deterioration in both activity and employment. Making the kind of specific policy proposals to the government that Sir Mervyn has always warned strayed too far into politics, Mr Noyer said the pension and welfare systems needed reforming. "Temporarily breaking the link between benefits and inflation," should be considered, he said. On state pensions, he said "it seems important to stop indexing our various pension schemes to inflation" while younger generations will have to pay into their pensions for longer and retire later. He added: "One of the key factors behind rising public spending is the size of the public sector wage bill. The strategic long‑term objective should thus be a trend decline in the number of public sector workers, which is high in France in relation to other comparable countries.