PARIS (Bloomberg) -- Just about the only person who has said “Yes” to French President Nicolas Sarkozy this year is Carla Bruni, his new wife.

Public resistance to Sarkozy’s proposals on deregulation and pension-spending cuts, plunging approval ratings and dissension in his party have damaged his ability to remake the nation’s welfare and labor systems. The prospect of a setback in local elections next month may deepen his political troubles.
“His credibility is in free fall,” said Francois Miquet- Marty, director of political studies at Paris-based polling company LH2. “`There is serious dissatisfaction on social and economic issues, and on his style. He needs a second wind.”
This month alone, taxi drivers rejected his plan to increase their numbers, the European Union criticized his proposed delay in cutting the budget deficit, and Sarkozy loyalists in the town where he was mayor declined to support his handpicked candidate for the job.
An Ipsos SA poll this month found only 39 percent of the French think the president is doing a good job, down from 67 percent after his election last May. The 53-year-old Sarkozy’s Feb. 2 marriage to pop singer Bruni, 40, after an October divorce from his previous wife, Cecilia Ciganer-Albeniz, hasn’t helped his standing, the Feb. 8-9 Ipsos survey suggested.
The most recent embarrassment for Sarkozy was the flap this week in the Paris suburb of Neuilly, where he served as mayor for 20 years. His candidate, his spokesman David Martinon, quit the race after being rejected by other members of the town council election list, which includes the president’s son, Jean Sarkozy, 22.
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The president’s troubles come after French economic growth lagged behind the euro region for a second year in 2007 and the trade deficit surged to a record. Inflation is the fastest since 2004 and consumer confidence is at a record low.
It’s a far cry from Sarkozy’s campaign agenda, which promised to increase consumer purchasing power and spur economic growth.
Sarkozy did manage to get unions and employee groups to agree last month on a compromise to loosen firing rules in exchange for more unemployment and training benefits. He also has pushed through the elimination of income taxes on overtime hours, and introduced a tax deduction for mortgage-interest payments.
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Many of his achievements, though, have come at a price. To calm fishermen blockading a port in December to protest rising fuel prices, he promised 310 million euros ($452 million) of subsidies. To persuade striking transport workers to give up pension privileges, he offered pay raises and higher retirement payments. To appease students outraged over a new law to give college presidents more freedom, he sold a $5 billion stake of Electricite de France SA to renovate universities.
Now he is running out of money to pay for much else. EU finance ministers on Feb. 11 pressed France to hold to a promise to balance its budget by 2010 -- a goal Sarkozy effectively ditched in July. With economic growth slowing, the deficit this year may exceed the EU ceiling of 3 percent of gross domestic product, Eric Chaney, Morgan Stanley’s chief European economist, said in December.
“Sarkozy’s reform method has been to inject public money,” said Patrick Artus, chief economist at Natixis SA in Paris. “He can’t do that anymore.”
His unpopularity will also make it harder to overcome opposition to plans to reduce medical reimbursements and require increased payments by patients or to curb pensions, said Jean- Francois Doridot, head of public opinion at Ipsos.
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Last week, Sarkozy gave in to a pair of one-day strikes by taxi drivers, dropping a recommendation by a panel he had appointed to give away licenses and increase competition and the number of drivers.
“He’s put people’s concerns and his reforms in the backseat,” said Pascal Perrineau, who heads Paris-based Cevipof, a political-studies institute.
An LH2 survey this month showed Sarkozy’s popularity plunging 26 percentage points from his July peak, and found respondents disapproving of his pre-wedding Christmas trips to Egypt and Jordan with Bruni.
“All governments, all majorities, all presidents meet up and down moments,” Sarkozy told reporters yesterday during a trip to French Guiana. “It seems there are difficulties and one has to face them with calm and humility and continue to work. For me, my rendezvous is the end of my term. I have made commitments to the French people and I will keep to them.”