The French government will scrap a local business tax in 2010 and is ready to consider cutting income tax in an effort to temper the impact of economic crisis, President Nicolas Sarkozy announced yesterday.

Aiming to defuse growing public anger over the slowdown, Mr Sarkozy said he would meet union leaders on February 18 to discuss a range of possible measures to help households, including increases to welfare handouts.

Between one and 2.5 million people took part in nationwide rallies last week to protest against Mr Sarkozy's response to the crisis, which has so far focused on boosting public investment rather than giving direct help to consumers.

Unions have threatened further strikes unless the government gives in to their call for specific measures to boost consumer demand.

President Sarkozy ruled out an increase to the minimum wage or any generalised reduction in sales taxes, saying his major concern was to encourage economic growth and protect employment.

"If consumers don't spend, it's because they are fearful for their jobs," he said in an interview carried live on three major television channels.

In an effort to convince companies to remain in France and not relocate to cheaper labour markets, Mr Sarkozy promised to end the unpopular business tax known as the taxe professionelle next year at a cost of some €8 billion.

"We will get rid of the taxe professionelle in 2010 because I want to keep factories in France," he said.

He added that the shortfall would have to be made up for local authorities, suggesting that other taxes, such as a carbon tax, could help cover the hole in their accounts.

Headline unemployment in the eurozone's second largest economy passed the symbolic two million mark in October last year, jumped by 64,000 in November, the biggest leap since at least 1993, and rose by a further 45,800 in December.

Mr Sarkozy ruled out any increase in the minimum wage, as many on the opposition left have demanded, but said he was ready to discuss cutting taxes for some two million earners.

He also suggested a possible increase in family welfare benefit or an increase in unemployment benefit, saying he wanted to protect the middle classes from the impact of the crisis.