Photo – AFP
Francois Hollande is a socialist of the old school and about a century behind the times. Fundamentally he has few new ideas beyond tax the rich and create more public sector jobs. He is not even very popular at home just now – but the French have only themselves and Sarkozy’s excesses to blame for having him there. Dominique Strauss-Kahn’s sexual excesses also helped. He makes impossible promises with a straight face. He promises to cut state spending without reducing public sector jobs. He will improve competitiveness without reducing state subsidies. And he has promised to reduce unemployment by the end of this year. Nonsense promises are not doing much for his credibility.
France’s credit rating is falling and even The Guardian has little good to say about his administration:
The Guardian: France’s second credit-rating downgrade by Standard & Poor’s in less than two years is as damaging politically for the socialist François Hollande as it was for his rightwing predecessor Nicolas Sarkozy, who lost the election shortly after France lost its AAA rating in January 2012.
S&P directly attacked Hollande’s economic policy, questioning the socialist government’s capacity to repair Paris’s stuttering economic motor. It said the problem with France was that the government’s tentative reforms were not enough to lift growth in the eurozone’s second largest economy.
Hollande, recently found to be the most unpopular French president on record in a poll by BVA, was already struggling to sell his economic measures to the nation. “The recovery is here,” Hollande declared in August after a small rebound in growth following months of stagnation. But real, sustained growth is expected to be slow in returning. ……
And now the economy of France, along with that of Italy, is actually shrinking. The global recovery needs Europe – and not just Germany – to do its bit. Instead, Hollande’s schoolboy economics are not just threatening the Eurozone recovery but actually threatening to postpone the recovery.
Reuters: The euro zone economy all but stagnated in the third quarter of the year with France’s recovery fizzling out and growth in Germany slowing. The 9.5 trillion euro economy pulled out of its longest recession in the previous quarter but record unemployment, lack of consumer confidence and anaemic bank lending continue to prevent a more solid rebound.
In the three months to September, the combined economy of the 17 countries sharing the euro grew by a slower than expected 0.1 percent. In the previous quarter it rose 0.3 percent – the first expansion in 18 months. The euro fell to a session low in response.
The French economy contracted by 0.1 percent, snuffing out signs of revival in the previous three months. It had been expected to post quarterly growth of 0.1 percent and has now shrunk in three of the last four quarters. …….
Unemployment is still increasing even though the number of French seeking jobs outside the country is also increasing. The rich have been fleeing Hollande’s swingeing taxes in droves.
France’s economy has buckled once again amid official warnings of an explosive political mood across the nation that threatens to spin out of control.
French output fell by 0.1pc in the third quarter and Italy remained trapped in recession, dashing hopes of a sustained recovery in Europe. “It is no longer a question of whether the eurozone can achieve ‘escape velocity’, but whether it can grow at all,” said sovereign bond strategist Nicholas Spiro.
The latest data show a continued erosion of France’s industrial base and export share. It risks shattering the credibility of President François Hollande, who has been talking up recovery for months. A YouGov poll showed his approval ratings have dropped to 15pc, the lowest recorded for a French leader in modern times.
While the risk of a eurozone bond crisis has greatly receded since the European Central Bank agreed to act as a lender of last resort in July 2012, this has been replaced by slow economic attrition. It resembles the mid-1930s slump under the Gold Standard and is fuelling political crises in a string of countries.
Le Figaro said loss of confidence in the French government is turning dangerous, citing a confidential report based on surveys by “prefects” in each of the 101 departments. “All across the country, the prefects described the same picture of a society that is angry, exasperated and on edge. A mix of latent discontent and resignation is being expressed through sudden eruptions of fury, almost spontaneously,” said the document. The report warned that people were no longer venting their feelings within normal social structures. Increasing numbers are questioning the “legitimacy” of taxes. ……
But there is no sign that Hollande will change from his classic policies of more taxes to support a profligate state sector and a bloated welfare system. Regulated austerity is called for but Hollande’s approach will only lead to an unregulated, painful and enforced austerity as in Greece and Spain.
I still believe in Europe and in many French firms but I have taken the precaution of shifting some of my (small) savings out of French stocks. France has not reached its bottom yet!
Tags: Dominique Strauss-Kahn, economics, Eurozone, France, Francois Hollande, Hollande, Nicolas Sarkozy
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