UNEMPLOYMENT IN France rose to its highest level in a decade in the fourth quarter of 2009, new figures revealed yesterday.

News that the jobless rate jumped to 10 per cent from 9.5 per cent in the third quarter comes as a blow to the ruling UMP party less than two weeks before voters go to the polls in the first round of regional elections.

According to a report by national statistics office Insee, the unemployment rate in all of France, including overseas territories, rose sharply to a level not seen since 1999.

The country is emerging from its worst recession since the second World War, although finance minister Christine Lagarde has predicted that joblessness will peak later this year as export demand picks up.

While government stimulus measures limited the increase in the numbers of people signing on, and with the economy now growing, totemic companies such as Air France KLM and Total have cut payrolls or announced that they plan to do so.

“We’ll have job losses for a big part of 2010,” Ms Lagarde said earlier this week on Europe 1 radio, “yet if demand from abroad picks up, private-sector investment will replace government spending and we’ll get out of this situation.”

Meanwhile, President Nicolas Sarkozy said yesterday that France would now play a more hands-on role in managing its shareholdings.

Unveiling a raft of policies aimed at halting the decline of French industry, Mr Sarkozy said the government would from now on have two representatives in companies with state shares.

Executives would also be expected to meet the government twice a year, he added, to discuss strategy, investments and results.

The government owns stakes in some of France’s largest companies, including carmaker Renault, utilities companies EDF and GDF Suez and nuclear firm Areva.

“The state is going to profoundly review its role as a shareholder in the big industrial companies,” Mr Sarkozy told workers at a Eurocopter factory in southern France.