November 2, 2014


France's Economy Has Been Splattered, and Front National is Feasting on the Carcass (Simon Heffer, October 27, 2014 , IB Times)

When Fran├žois Hollande campaigned to be president of France in 2012 he said, in a now-infamous comment, that his "true enemy" was high finance. It was indicative of an anti-capitalist policy he would choose to inflict on a country already suffering the effects of sclerosis and over-regulation. Now exactly halfway through his five-year term, the effect of Hollande's assault on what his comrades sneeringly termed "Anglo-Saxon economics" is plain for all to see.

In economic terms the damage has hobbled a large section of French society. Unemployment is now 3.43 million, or over 12%. The country's debt is 95.3% of GDP. Growth is non-existent. The government's deficit reduction plans have failed, with the result that the outgoing European Commission has rejected France's new budget.

To recite these facts - and they are facts, not assertions - is to invite the defensive comment by Hollande's supporters that it is "French-bashing". It isn't, because France's neighbours and partners have no interest in bashing the country. All those who discuss the present state of the French economy seek to do is to demonstrate what has gone wrong and, perhaps, to indicate how it might be put right.

But the mistakes made by the Hollande administration are so profound, and were so predictable, that there is a strong element of humiliation in admitting them: it is as if the country had walked out slowly in front of a high-speed juggernaut and is now wondering why it has been splattered all over the road.

The economic damage has, inevitably, brought political difficulties. Hollande's standing in the popularity polls is around 13%, the worst since records began. He is on his third government this year, and this one may not last long. Manuel Valls, his increasingly right-wing prime minister, harangued his party last week and told it to embrace reform or face oblivion. [...]

France is screaming for structural reforms. A country in which the trades unions remain powerful has to embrace the rules of the global economy, or it will sink. It is preposterously over-regulated, with absurdly high barriers harming entry to many trades and professions, and a 35-hour week still in force. Although its productivity is still superior to many of its competitors, it is not high enough.

High taxation has driven hundreds of thousands of the most talented of French out of the country since 2012, as anyone walking down a street in west London will hear. Taking their wealth with them as well as their entrepreneurial flair, they have seriously impoverished a country that did not cherish them.

Posted by at November 2, 2014 7:17 AM

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