* France will not adopt austerity measures
* Plans to restore public finances once recovery takes off
* Greater effort on pensions demanded of high earners
(Adds details)
PARIS, May 10 (Reuters) - France will not adopt austerity measures, unlike some of its European Union partners, but will look to restore its public finances as the economic recovery takes root, French President Nicolas Sarkozy said on Monday.
The government said last week that it was going to freeze much public spending over the coming three years in an effort to keep a lid on the budget deficit, but Sarkozy told union and business leaders this did not amount to an austerity plan.
"In the framework of efforts to stabilise the markets which we took last weekend, some of our partners who are under the most threat announced austerity measures," Sarkozy said.
"Some would want to see a similar turn in our economic policy. I tell them they are wrong."
However, Sarkozy added that it was still "imperative" to rectify public finances to prevent market turmoil from undermining the efforts made to emerge from the economic crisis.
The debt crisis pummelling Greece has threatened to suck in other EU economies including Portugal and Spain.
Worried about its own cherished AAA rating, the French government announced a broad spending freeze last week and officials say it is vital on-going negotiations over a reform of the loss-making pension reform lead to a substantive deal.
Sarkozy said on Monday the reform would require high earners to pay larger contributions to the state system, adding that income from capital would also be taxed at a higher rate to help make up the pensions shortfall.
But the president added that the reform would not work if it just involved hiking pension charges.
ARGUING OVER AUSTERITY
The overhaul is due to come into force by the end of 2010, but the government is not expected to introduce major changes overnight, preferring to ease in the measures progressively.
France is forecasting a public deficit to come in at 8 percent of gross domestic product this year and aims to bring this down to within the EU's three percent limit by 2013.
In an effort to meet this target, French Prime Minister Francois Fillon's office said last week that that state spending, excepting interest payments and pensions, would be frozen in value for the period 2011-2013. [ID:nLDE6451OV]
It added that state operating costs would be cut by 10 percent over three years, with a 5 percent cut in 2011.
Prominent members of Sarkozy's centre-right UMP party have said this amounted to an austerity plan -- a term which has become something of a political taboo in France out of fear that the very notion of belt-tightening would fuel street protests.
"The word that I myself would use is 'austerity'. After all, we're not here to fight over words," Jean-Francois Cope, head of the UMP parliamentary group, told Europe 1 radio on Monday.
Sluggish growth prospects have made the task of restoring order to public finances more difficult and the European Commission has said assumptions underpinning the 2011 and 2012 deficit forecasts were "optimistic". (Reporting by Yann Le Guernigou and Emmanuel Jarry; Writing by Sophie Taylor; editing by Crispian Balmer)