Just when this avowed socialist is belatedly taking steps to resurrect a moribund economy and save his presidency, he attracts the wrong kind of publicity by having a clandestine affair with an actress while living in the Elysee Palace, official home of the head of state, with his mistress.
Inevitably, the revelations of the dalliance with Julie Gayet – and the hospitalisation of the president’s shocked first lady Valerie Trierweiler – brought the spotlight back on to a largely ineffectual 18 months in office. London business newspaper City AM derided Hollande’s management of the world’s fifth-biggest country while citing “awful social problems” and “frighteningly high taxation”.
And then after the French ambassador in London responded with an angry letter accusing the paper of “French bashing”, it brought down further opprobrium on the nation’s leader. The president “seems to manage his country’s finances as well as his personal affairs”, wrote Brooks Newmark, a Conservative MP and member of the parliamentary treasury committee.
Never a surplus
Both of them have a point. The latest Global Competitiveness Report by the World Economic Forum ranks the home of “liberty, equality, fraternity” at a disastrous 130 out of 148 for its “regulatory burden”. As for the flexibility of its labour market, the country comes out at well over 100 on all counts.
Finally, on quality of government spending, it rates a poor 83rd. Since Hollande’s government spends 57 percent of GDP – over four percent more than the revenues it takes in, the implications are obvious, as they have been for years. In 60 years no French government has managed to achieve a surplus or seemed in the least interested in doing so.
As most other objective international organisations such as the OECD and IMF have long pointed out, France is a punitive tax-gatherer and a profligate spender. They have repeatedly warned Hollande to do something about it. And despite being known as the “president of high taxes” as well as the “imprudent president”, as L’Express magazine headlined after the latest bedroom revelations, he has against all predictions taken heed.
France is a punitive tax-gatherer and a profligate spender
Assault
Although Hollande remains an unabashed fan of big government – “I am a socialist. I am not won over by liberalism, in fact quite the opposite because it’s the state that takes the initiative”, he said in January, he has listened to big business and quietly launched an assault on his country’s problems.
He’s taking the axe to crippling social contributions by business – this year they will pay €30bn less. And, incroyablement, he is committed to cutting public spending by €15bn in 2014 – and by a total €50bn between now and 2017, much to the fury of the more militant unions.
Simultaneously, an attack on red tape is supposedly under way. Hollande has promised to reduce the mountain of regulations under which French businesses labour. But, as Le Monde points out, he proposed something very similar – the still-awaited “shock of simplification” – back in 2012.
Also purportedly in the offing is a concerted attack on direct and indirect individual taxes, but nobody’s waiting up. Currently, France’s best and brightest spend more than half the year working for the government. Hence the stampede by wealthy French people to lower-taxed Switzerland.
Start-ups
And yet France has the foundation for a recovery, if Hollande has the will. Despite the red tape, France attracted more foreign companies in 2012 than any other European nation. Indeed the US is one of its biggest investors. To boot, it’s a particularly favourite location for start-ups, in fact heading Germany.
Tourists don’t care about economics – France is the third-most attractive country for visitors after the US and Spain. And many shop at the five-star stores on the Champs-Elysees, showcase for a home-grown luxury sector that claims around a quarter of the industry’s annual global sales of €210bn.
Finally, far from spending half the day over cafes au lait while discussing football or cycling, French workers are, well, workers. They are officially the second-most productive in the world. Only Americans beat them, according to the OECD. Deeply family-minded, the French might have more days off but they more than catch up when they’re on the job.
Given that work ethic, the “imprudent president” may still have time to save the nation.
