Sarkozy kicks off election year with warning

France entered an unpredictable election year on Sunday, with polls showing Sarkozy's main contender, Socialist candidate François Hollande, leading in the race for the presidency.

"What is happening in the world announces that 2012 will be a year full of risks but also full of possibilities. Full of hope, if we know how to face the challenges. Full of dangers, if we stand still," Sarkozy said during the last New Year's Eve address of his first term.

"France's destiny could once again be tipped" in 2012, Sarkozy said, highlighting his experience in dealing with the eurozone debt crisis.

"Emerging from the crisis, building a new model for growth, giving birth to a new Europe - these are some of the challenges that await us," he said.

With the crisis and the French economy set to take centre stage in the vote, right-wing Sarkozy also sought to steal some thunder from the left, vowing action on unemployment and saying the financial sector would not set French policy.

He promised "important decisions" on fighting joblessness before the end of January, after new figures last week showed unemployment at a 12-year high, with the number of registered jobseekers in France hitting 2.84 million.

And he hit back at attacks claiming his government has gone too far to appease financial markets and credit rating agencies to maintain France's cherished triple-A credit rating.

"I say this for everyone to hear -- neither the markets nor the agencies will decide French policies," he said.

After imposing two deficit-cutting packages aimed at saving a total of €72 billion ($93 billion) since August, Sarkozy also said no new austerity measures would be announced in 2012.

"The problem is not one of a new package of spending cuts in the coming year. The government has done what needed to be done," he said.

With the speech, "the campaign is launched," newspaper Le Journal Du Dimanche wrote on Sunday - though Sarkozy has not yet officially announced his candidacy for re-election.

"In presenting last night the last (New Year's) greetings of his term, Nicolas Sarkozy took the first step in his future campaign," the newspaper wrote.

In his own New Year's Eve message to voters, Hollande slammed Sarkozy's handling of the economy and urged voters to rally around his candidacy.

Warning that unemployment has "resumed its infernal march" and that "a recession is threatening", Hollande said 2012 would be a year "to choose a new president, to choose a new destiny for France."

Sarkozy's five-year term has been "inconsistent, incoherent and unjust," Hollande said.

Hollande's communications director Manuel Valls accused Sarkozy of fear-mongering in his speech.

"This is Nicolas Sarkozy's trademark and it will be his trademark during the campaign... to play on fears and on fear of the crisis," Valls said on Europe 1 radio.

Sarkozy was to travel Sunday to meet voters in the northeastern city of Metz, part of a tour of regional cities that has seen the opposition accuse him of using state funds for his campaign.

France will vote in the first round of the presidential election on April 22nd, and potentially a second round on May 6th, followed by parliamentary elections in June.

Support for Sarkozy has been rising in recent weeks but he remains behind Hollande in the race.

An opinion poll by OpinionWay-Fiducial released on December 20th showed Hollande with 27 percent of voter support against 24 percent for Sarkozy.

As well as on the left, Sarkozy is facing challenges on the far-right from Front National candidate Marine Le Pen, consistently in third place in recent polls, and from centrist Francois Bayrou, the third-placed candidate in France's 2007 presidential vote.