Events throw France's Hollande a lifebuoy

President Hollande address to the Council of Europe. 13 February 2015 Image copyright Getty Images
Image caption Finally President Hollande is seeing an improvement - albeit modest - in his political fortunes

The good news kept on coming this week for President Francois Hollande.

There was the first ever foreign sale of French-built Rafale jet fighters, to Egypt. Car-maker Renault created 1,000 jobs, telling the world that government-backed wage restraint was paying off.

And then there were those gifts from the economic gods: blessings which the ever-optimistic president must regard as proof that the best policy is always patience.

Low oil prices; low interest rates; a falling euro: none of them are his doing - but then who said good luck wasn't also part of politics?

Coming after his lift from the Charlie-Hebdo fall-out last month, plus his diplomatic performance this week in Minsk, you can see why the president does seem to have a little more spring in his step.

Minsk was a high-profile bid with German Chancellor Angela Merkel to broker a ceasefire in Ukraine.

Image copyright EPA
Image caption Securing the Ukrainian ceasefire deal burnished President Hollande's diplomatic credentials

"There really has been a wind of optimism over Paris these past weeks," says Emmanuel Lechypre, economic commentator at BFM Business TV.

"The external factors have created an incredibly favourable financial context."

For Patrick Artus, chief economist at Natixis Investment Bank, "when you add everything up, we could be looking at growth of 1.5% this year - or 2% if investment picks up. It doesn't sound much, but for France that is a big change."

So have economic circumstances ridden to the rescue of the once-beleaguered French head-of-state?

Of course it is too soon to say, but a couple of points are worth making.

First, it would be unfair not to recognise that the government has already - and independently of external events - made a clear shift towards pro-growth policies.

Finance Minister Emmanuel Macron has been spending days and nights at the parliament, shepherding through the reform bill that bears his name - and winning plaudits for his inclination to persuade rather than enforce.

The law - a hodgepodge of 200 different deregulatory measures - will not work wonders, but it is a clear move in the direction of supply-side, pro-business economics.

"Hollande is doing about 10% of what needs to be done on the big issues facing France: lower taxes; labour market reform and so on. They are small steps - but they are steps in the right direction. And in France that is the only way it is going to happen," says Lechypre.

"In France there will never be a Thatcherite grand soir [revolution]."

Image copyright AFP
Image caption How will President Hollande use his newly found political capital?

The second point is that much depends on what Mr Hollande does with his good fortune.

Nicolas Beytout, editor of the pro-market L'Opinion newspaper, worries that pressure for the structural reform that France badly needs will disappear.

"When times are easy, that is when it is hardest to make reforms and to persuade people they are needed. But of course that is the very moment they have to be carried out," he said.

"Arguably what the government should be doing with the lower oil price is putting up taxes on energy and using the surplus to bring down social charges or invest in infrastructure," says Artus.

"But it's not. In effect it's allowing the whole of the bonus to go to the consumer - and that's why we're seeing a rapid improvement in consumption. But that is not necessarily doing much for the long-term economy."

However, he goes on: "I think foreign analysts underestimate the determination of this government to move in the right direction: towards more flexible labour markets, improving the retraining system - which is one of France's biggest problems - and cutting taxes.

"But the government knows that even if it does this, the fruit of its work won't be evident for three or four years."

Which is why unexpected economic windfalls are so welcome.