PARIS President Nicolas Sarkozy's effort to persuade voters he is the best man to lead a French economic recovery suffered a blow on Tuesday when a survey showed stalling growth as he struggles to make headway against his Socialist rival.
Less than two weeks before voting begins, the conservative's narrow lead over challenger Francois Hollande is steady or shrinking for the April 22 first round and he is still trailing in the May 6 runoff, three opinion polls showed.
With unemployment at a 12-year high, purchasing power dwindling and France stripped of its prized AAA status by one credit rating agency, the Bank of France offered no respite for Sarkozy's economic record.
The central bank survey estimated that the economy failed to grow at all in the first three months this year, after expanding just 0.2 percent in the final quarter of 2011, and there were no signs of a strong recovery in the next few months.
One of Hollande's closest aides and a possible future finance or prime minister, Michel Sapin set out the fine print of the Socialist candidate's economic and EU policy in an interview with Reuters. He said Hollande accepted the content of a strict fiscal treaty negotiated by European leaders but would insist on adding a section on practical measures to promote economic growth before ratifying the text.
"If you take the wording of the treaty literally, there are no insurmountable problems with it," Sapin said. "On the other hand, the treaty alone, without putting in place growth policies, does not work. For us, it's about renegotiating the treaty to complete it with a growth clause.
Sapin said the Socialists would set new rules by 2013 to control speculative activity in the banking sector but would not break up France's universal banks.
He said Hollande plans to keep his proposed 75 percent top income tax bracket for people earning more than 1 million euros ($1.3 million) a year for as long as the rest of France has to make exceptional efforts to reduce the public debt.
Sarkozy saw his lead for the first ballot slip to half a percentage point from 2 points a week ago in a poll by Ipsos Logica, with 29 percent support to Hollande's 28.5 percent.
The same poll showed Hollande retaining a 10-point lead in voting intentions for the May 6 runoff with 55 percent to Sarkozy's 45 percent, unchanged from a week earlier.
All three polls indicated far-right candidate Marine Le Pen had strengthened her position in third place, ahead of hard left candidate Jean-Luc Melenchon in fourth.
Most analysts expect a tighter finish between Sarkozy, who is being punished for economic gloom and his flashy style, and the more popular but bland Hollande, whose call for higher taxes on the rich has found fertile ground.
In his manifesto, Sarkozy promises to achieve a budget surplus for the first time since 1974 and cut France's swelling debt, warning that Hollande would lead the country towards the fate of Greece or Spain.
However, his policy of cutting the budget deficit is helping to slow the economy and hurting his election chances.
"You cannot have a tough fiscal adjustment over two years and expect strong growth at the same time," said Michel Martinez, economist at Societe Generale in Paris.
Sarkozy, an aggressive debater, has challenged his rival to two television debates between the rounds but Hollande deflected the call, saying it was presumptuous to prejudge the second round when voters had not yet cast their ballots in the first.
An Ifop Fiducial poll showed Sarkozy with 28.5 percent to Hollande's 27 percent in round one, unchanged over the last month - but Hollande's lead in the run-off narrowed to six points from eight points two weeks ago.
A third poll by Harris Interactive gave Sarkozy a one-point lead in the first round at 28 percent to Hollande's 27, down from 3 points a week earlier. It too put Hollande ahead of Sarkozy 53 to 47 in the runoff.
"For Nicolas Sarkozy to be re-elected he would have to be ahead of Francois Hollande by four or five points in the first round," Ifop analyst Frederic Dabi said. "It's the essential condition for him to turn things around but it's not working."
The president enjoyed a brief boost in the polls last month after killings by an Islamist gunman and the ensuing siege enabled him to play his preferred role of crisis manager.
The drama, which gripped the nation and dominated headlines, helped shift the focus away from the economy to security and immigration, where Sarkozy is usually strongest. However, unemployment and purchasing power, which rank as voters' top concerns in polls, have since returned to the forefront.
Sarkozy has a chance to breathe fresh life into his campaign in television appearances on Tuesday and Thursday after the presentation of his full manifesto last week failed to give him much uplift. Hollande will have a chance to fight back with his own television appearance on Wednesday.
WHO WILL BE THIRD?
The Socialist's first-round score has slipped only slightly as the more fiery Melenchon has picked up momentum on the left. Melenchon was credited with between 13 and 14.5 percent of the first-round vote, trailing Le Pen who has 15 and 17 percent.
Eager to secure the backing of left-wing voters leaning towards Melenchon, Hollande renewed an offer on Monday to include Communists in his government if elected.
"Those who support me in the second round of the presidential election will be part of the majority. They will help lead France in government," Hollande said on i-Tele.
Centrist Francois Bayrou, a potential kingmaker if he won enough votes, continues to decline with his share of the vote in the first round falling below 10 percent in two of the polls and just scraping 10 percent in the third.
"Voters don't see the point of voting Bayrou," Ipsos analyst Jean Francois Doridot said on France Info radio.
The Ipsos poll was carried out for various French media and based on interviews with 955 people on April 6-7. The Ifop Fiducial poll was also conducted for various media and was based on interviews with 1,869 people on April 5-7.
The Harris poll for magazine VSD and LCP TV channel was based on interviews with 1,033 people on April 3-6.
(Additional reporting by Patrick Vignal, Brian Love, Catherine Bremer and Geert de Clercq; Editing by Paul Taylor and Janet McBride)