The troubles of France's President Hollande

 
President Hollande visiting Tulle, 6 Apr 13 Opinion polls suggest Mr Hollande has lost much voter support since his election

France and its president are of major concern in Berlin and in Brussels. Some German officials say France is the country in the eurozone which worries them the most.

It is not about the recent scandal, which caught a French minister, Jerome Cahuzac, lying about his bank account in Switzerland. That certainly has embarrassed President Francois Hollande and has triggered the question of who knew what and may still lead to a government reshuffle or more.

It is not about another close ally of the president who had an account in the Caymans. Yes it sits uncomfortably with the rhetoric of the presidential election, during which Mr Hollande said "my true adversary is the world of finance". It revives the suspicion that the circle around Mr Hollande are "champagne socialists". Already the firebrand of the left, Jean-Luc Melenchon, is calling for a demonstration to "purify" the left.

It is the French economy that lies at the heart of the malaise. Sooner or later radical decisions will have to be taken. Mr Hollande campaigned on a growth ticket, but has watched the prospects of growth retreat.

He promised to challenge the German strategy for Europe of cutting deficits while restructuring economies. Mr Hollande does not believe the medicine is working. Indeed, recently he said "sticking with austerity would condemn Europe not just to recession but to an explosion". But it is the German narrative which prevails.

Deterioration

In the 11 months since President Hollande came to power, unemployment has risen in France to 3.2 million, the highest it has reached since 1997. Debt has gone above 90% of GDP. The promise to reduce the deficit this year to 3% of output has been discarded.

France is an important enough country to stand up to the European Commission, and there may well be further flexibility in reaching agreed targets for reducing the deficit.

But the core dilemma remains. France needs to find 60bn euros (£51bn; $78bn) of spending cuts by the end of 2017. The rich - many of whom have boarded the trains to London and Belgium - have been soaked. There is little alternative than to cut spending. Mr Hollande understands the challenge. Only recently he said that "public spending has reached 57% of national wealth. It was 52% five years ago. Do we live better for it? No."

Cutting the size of the French state would never be easy - particularly for a French Socialist. But cuts will have to be made at a time the economy is flat-lining. Consumer spending is in retreat. Car sales have collapsed.

President Hollande's appeal at the last election was that he was not Nicolas Sarkozy and that he would preserve the French way of life. It was a feel-good campaign - but reality has struck quickly. The challenge for the president is whether he will tell the French people that their social welfare model is not sustainable and that far-reaching reforms are necessary.

Some new rules have been adopted to loosen France's strict labour regulations. They are regarded as a start, but no more.

What so rattles the officials in Berlin and Brussels is the fear that France could slide into the category of those southern European countries in trouble. That has not happened yet, but the concern is of the markets losing faith in Paris.

On Monday President Hollande will have a working dinner with David Cameron. The British prime minister is looking for changes to the EU treaties as a means to winning some concessions for the UK. The French and the Germans (Mr Cameron will be in Berlin later in the week) may not oblige. They have cooled on treaty change, even if the eurozone crisis demands it.

In the case of President Hollande the last thing he would want is having to put a treaty change to the French people. In their current mood and faced with a stagnant economy they might well reject any referendum.

 
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

Greek crisis deepens amid EU tensions

As time pressures mount, a deal to settle the Greek bailout crisis still hangs in the balance.

Read full article

More on This Story

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +3

    Comment number 34.

    If the French dont like it they are not shy of revolting. They dont go as far as they once did tho.

  • rate this
    +1

    Comment number 33.

    Yet one more blethering politician who has been bitten in the backside by reality. You can't spend your way out of debt, if you could I would be rich by now.

  • rate this
    -3

    Comment number 32.

    @23. paulthebadger
    Your equivalence of government spending and a household budget shows you are as economically illiterate as our Chancellor.

  • rate this
    +1

    Comment number 31.

    Having read Le Figaro today, it is amazing at the cries for policies akin to the late Great Margaret Thatcher. The truth is France knows that she was correct and one contibutor asks for her to be "reincarnated to save France".
    The Horses Mouth has spoken!?!

  • rate this
    +3

    Comment number 30.

    "Since when did Europe have a United government, elected by the people?"

    That would be the MEPs, in Brussels.

    The cruelty of that pithy remark is understood by everybody in the EU, including the MEPs themselves. They have no power.

    The EU is a fraud built upon a falsehood built upon a lie.

    The lie is that it was needed. The falsehood that it is democratic. The fraud that it is legitimate.

  • rate this
    +5

    Comment number 29.

    Seriously, don't you get tired of that "spend beyond their means" mantra? The reality is that most European countries share a single market and have little hope of improving their situation if the economy of their neighbors keeps getting worse. As long as most of Europe follows the austerity lunacy, there's little hope that any country will do well, no matter the colour of its political leaders.

  • rate this
    0

    Comment number 28.

    @16.Little_Old_Me
    Lots of tiresome claims, yet again, that the Eur can never work becuase a currency "cannot work" across mulitple nations

    economically no reason why not provided they're willing to accept fiscal transfers between Nations & ideally it forms a symmetric currency space
    we see a situation where Germany only reluctantly makes transfers out & transfers in, whilst real, are not obvious

  • rate this
    +6

    Comment number 27.

    16. Little_Old_Me

    .....yet the US (50 States) the UK (4 countries) the Australian $ (6 States) all show that arguement to complete and ytter HOGWASH....

    Sorry to point out the tiny flaw in your argument, but the USA and the UK have 1 government. There is a clue in their names: UNITED States of America and UNITED Kingdom.

    Since when did Europe have a United government, elected by the people?

  • rate this
    +5

    Comment number 26.

    As the French political journal Le Point pointed out a few weeks ago, the French government is spending 110 Euros for every 100 it receives. This is unsustainable and something will have to give. I suspect, however, that events will drive French Government action rather than the other way around.

  • rate this
    +1

    Comment number 25.

    'Latin' europe is overburdened with a bloated bureaucracy & corruption and idleness. Equalisation with N Europe was never possible until they worked as hard as Germans and as long as Brits & other N Europeans. The CAP still handicaps the transition because it has feather bedded them for too long. PIIG have better pensions, lax tax collection & have mortgaged all our futures. God help the young.

  • rate this
    +4

    Comment number 24.

    @21
    ""But cuts will have to be made."
    Really? Is that a fact or just an opinion?"

    Given that it concerns a future prediction, it was scarcely presented as a fact.

    Regarding the value of opinion, you seem blissfully unaware of what is happening in global credit markets, concerning the Eurozone. Greece, Portugal and Spain have all been rejected by the bond market. France is next.

    In my opinion.

  • rate this
    +1

    Comment number 23.

    You cannot spend what you do not have or, earn but that is what governments do.

    If there is a diminishing income there must be a comparable diminishing expenditure. This is the same for any household.

    It is all the management levels in government and quangos that drain the money. maintain services, drastically prune management.

  • rate this
    +3

    Comment number 22.

    Hollande may describe himself as a socialist but he accepts the neo-liberal economic paradigm which is incompatible with socialism. People who accept neo-liberal economic principles but argue for (loosely) "socialist" social programs are better described as liberals or argubly Social Democrat. He faces the Modern Social Democrat problem which is that their policy & economic ideas are contradictory

  • rate this
    -1

    Comment number 21.

    "But cuts will have to be made."

    Really? Is that a fact or just an opinion?

  • rate this
    +4

    Comment number 20.

    @16 I think you have just disproved your own point. In all of the examples you gave Currency Union followed or was part of Political Union. The Euro is an attempt to produce Political Union AFTER Currency Union whilst simultaneously promising no cross border movement of capital to supoort the currency and we can see how well that is going.

  • rate this
    +1

    Comment number 19.

    #16 what do your examples of successful currency unions show?

    All were imposed by force. All are in countries with a common language, common social, political and legal traditions. Countries where migration of workers across state lines runs at 10x EU average, where much larger federal subsidies for poor states than EU avg is accepted.

  • rate this
    +8

    Comment number 18.

    My point about Cahuzac is that economic breakdown is nothing, compared to a breakdown of the rule of law.

    When different castes have different legal rights, there is no equality before the law, and there can be no rule of law.

    In Europe today, a caste system has formed, with bankers and EU elite at the top, and everyone else strung out below.

    We are reverting to the dark ages, to feudalism.

  • rate this
    +3

    Comment number 17.

    Mr Hollande's party controls all levels of govt; He has no immediate political rival; he has not faced any big demonstrations against his economic policy, nor any serious strikes. He even has a fairly benign bond market. In short, Yet, Mr Hollande seems like a glag blowing in the wind. He must explain what needs to be done, & why - honestly and straitforwardly.
    Is he afraid?

  • rate this
    -3

    Comment number 16.

    Lots of tiresome claims, yet again, that the Eur can never work becuase a currency "cannot work" across mulitple nations.....


    .....yet the US (50 States) the UK (4 countries) the Australian $ (6 States) all show that arguement to complete and ytter HOGWASH....


    ....too much austerity is Europe's problem......and it is making the debt situation WORSE......

  • rate this
    +1

    Comment number 15.

    It is the EU's leaders' obsession with Economic Sanctions on its own people (they call it Austerity - it is not) that is driving the EU into a Depression. There are not enough brave leaders who can guide the EU through this phase - they are all the same craven lot looking after their own selfish interests. it is also wrong for France to go into the envy tax of 75% for the rich - a mistake.

 

Page 6 of 7

 

Features

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.