Hollande in hole of scandal, debt and despair

Ex-pat journalist Emma-Kate Symons sums up French president Francois Hollande’s bumbling performance in his first 12 months in office in two words – Quel catastrophe!

From her first-hand perch in the country, she reports that there is panic at the Elysee presidential palace as France, the second-biggest economy in Europe, fails to lift itself out of a morass. Unemployment has shot up from 10 per cent to 13 per cent, a savage 75 per cent tax on the rich has triggered an exodus as its wealthy citizens and a ministerial tax evasion scandal by disgraced former budget minister Jerome Cahuzac has cut to any credibility Hollande’s government had.

But it is the everyday French citizen who is increasingly nervous as some economists suggest the country could be facing a “triple-dip recession’’ on the back of a sick economy. Where there is anxiety about the future, French people are spending less.

Hollande’s disapproval rate is a record 70 per cent and he has only been in office for less than a year. In The Financial Review Symons says Hollande’s election promises of stimuli for growth “are already dead’’: “They have been buried under Hollande’s absence of conviction, leadership and authority’’.

The problem Hollande refuses to face is the bloated public spending at 56 per cent of GDP and rising. Instead, having slugged the upper classes, he is biting the middle class with new taxes to plug incidental holes in the deficit. But, he has obstinately refused to cut into France’s bloated public service to fill a gaping abyss in the deficit.

While Hollande bumbles, “France faces its worst political and economic turmoil in decades’’ writes Symons.

Over the border in Germany, France is seen as a “huge drag’’ on the Eurozone because the socialist government has not moved fast enough on labour market reforms or deficit reduction.

Jean-Louis Dalbera, a banking sector expert has argued in Le Monde that although France has not fallen into full recession yet, it cannot rejoice.

The country’s first quarter growth of 0.1 per cent was only achieved because of a “significant rise in the public deficit’’, which accounts for 4.8 per cent of GDP.

He reckons belt-tightening will only aggravate the economic situation. “But at the same time we are heavily increasing taxes,’’ he writes. “We must finally take aim at public spending.’’

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