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France: waiting for Godot France: waiting for Godot
(4 months later)
The run-up to François Hollande's second press conference of his presidency could not have been less auspicious. France had just slipped back into recession, purchasing power had just dropped by 0.9 %, the heaviest fall in 30 years, and unemployment was at an all-time high. But to listen to the president, you would have thought that the French ship of state was on course.The run-up to François Hollande's second press conference of his presidency could not have been less auspicious. France had just slipped back into recession, purchasing power had just dropped by 0.9 %, the heaviest fall in 30 years, and unemployment was at an all-time high. But to listen to the president, you would have thought that the French ship of state was on course.
If, in the president's words, his first year in power had been about bringing France's public spending under control (at 56% of GDP it is still nine points above Germany's) and putting the eurozone on the right track, the second year would see France going on the offensive. Now you may think, having seen most of his predictions for his first year in office crash in flames, Mr Hollande would be loath to create any more hostages to fortune. Not a bit of it. Mr Hollande called for the establishment of an economic government in the eurozone that would have: its own budget, debt, harmonised tax system and full-time president; a €6bn European youth programme; a pan-European energy policy; and more integration in the eurozone. As a founder member of the EU, it was France's responsibility to pull the sick, declining, doubting continent out of its torpor, the president said. Meanwhile, Angela Merkel was saying the opposite. Rejecting the idea of pooling debt, she stressed the importance of French reforms and each government getting their own finances in order. Apart from the hint Mr Hollande made that he will reform a pension system that is bust and that is borrowing from the markets, the distance between the two parts of the so called European motor is wide enough.If, in the president's words, his first year in power had been about bringing France's public spending under control (at 56% of GDP it is still nine points above Germany's) and putting the eurozone on the right track, the second year would see France going on the offensive. Now you may think, having seen most of his predictions for his first year in office crash in flames, Mr Hollande would be loath to create any more hostages to fortune. Not a bit of it. Mr Hollande called for the establishment of an economic government in the eurozone that would have: its own budget, debt, harmonised tax system and full-time president; a €6bn European youth programme; a pan-European energy policy; and more integration in the eurozone. As a founder member of the EU, it was France's responsibility to pull the sick, declining, doubting continent out of its torpor, the president said. Meanwhile, Angela Merkel was saying the opposite. Rejecting the idea of pooling debt, she stressed the importance of French reforms and each government getting their own finances in order. Apart from the hint Mr Hollande made that he will reform a pension system that is bust and that is borrowing from the markets, the distance between the two parts of the so called European motor is wide enough.
A more pressing task for Mr Hollande surely is to persuade a French audience he is capable of pulling his country out of its torpor. And on that test, he is failing. In January, he vowed to bring unemployment down by the end of the year. YesterdayOn Thursday, he said it was still "possible" to reverse the trend. He expressed complete faith in his prime minister, Jean-Marc Ayrault, but vowed there would be no reshuffle "for now". There is no doubting Mr Hollande's honesty.Nor is he looking for popularity. But there are strong doubts whether he has the strength to swim against the currents pulling him under. He is neither cutting fast enough to satisfy the austerity meisters of Berlin, nor is he reflating the economy. France enjoys the cheapest borrowing rates on the bond markets for decades, but is loath to use them. The US shows what even a small stimulus can produce.A more pressing task for Mr Hollande surely is to persuade a French audience he is capable of pulling his country out of its torpor. And on that test, he is failing. In January, he vowed to bring unemployment down by the end of the year. YesterdayOn Thursday, he said it was still "possible" to reverse the trend. He expressed complete faith in his prime minister, Jean-Marc Ayrault, but vowed there would be no reshuffle "for now". There is no doubting Mr Hollande's honesty.Nor is he looking for popularity. But there are strong doubts whether he has the strength to swim against the currents pulling him under. He is neither cutting fast enough to satisfy the austerity meisters of Berlin, nor is he reflating the economy. France enjoys the cheapest borrowing rates on the bond markets for decades, but is loath to use them. The US shows what even a small stimulus can produce.
Instead, Mr Hollande's strategy for growth relies on the rest of the sick eurozone supplying the demand that French exports need. There is nothing to indicate that will happen any time soon. Mr Hollande may well come to the podium next year pleading for more time.Instead, Mr Hollande's strategy for growth relies on the rest of the sick eurozone supplying the demand that French exports need. There is nothing to indicate that will happen any time soon. Mr Hollande may well come to the podium next year pleading for more time.
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