* Hollande trying to pull economy out of stagnation
* Housing starts at 16-year low
* Tax relief expected after court rejected payroll rax cut
PARIS, Aug 19 The French government will
announce measures soon to boost construction and give tax relief
to low income households, a minister said on Tuesday as
President Francois Hollande tries to pull the economy out of
Real estate has become a major headache for the government,
with housing starts in France down to a 16-year low - a serious
drag on the economy which property developers blame partly on
regulations that took effect this year to set rent limits in
cities with more than 50,000 people.
Tax relief has been expected since the government said it
would find a replacement solution for payroll tax cuts struck
down by France's top court this month.
"Urgent measures will be announced soon," Junior European
Affairs Minister Harlem Desir told BFM TV. "We will, in the
coming days, propose a new tax relief measure for low-income
Desir declined to say if any of these measures would be
announced on Wednesday at the government's first cabinet meeting
after the summer break. He said discussions were ongoing on
options including increasing welfare benefits.
"We cannot accept that housing remains stranded," he said,
adding that the sector was a priority to kick-start the economy
and create jobs.
France slashed its growth forecasts for both 2014 and 2015
last week and said it would miss its public deficit target this
year after data showed the economy delivered no growth for the
second quarter in a row.
Desir also reiterated French calls for European Union peers
to give France some more leeway on meeting its deficit targets
and for the EU and its central bank to do more to boost growth.
"The ECB must have a bolder policy," he said, also repeating
calls for a "major" European investment plan. He asked for more
details on a pledge by incoming European Commission President
Jean-Claude Juncker for a 300-billion-euro public-private
investment programme over the next three years.
(Reporting by Ingrid Melander and Jean-Baptiste Vey; Editing by
Dominique Vidalon and Andrew Heavens)