Monday a new start?
It has taken ten long months for Nicolas Sarkozy to start to understand what a president should be, but at last the penny seems to have dropped. Even as he was brushing off his disastrous poll ratings with deliberate if unconvincing insouciance, he was clearly panicking behind the scenes, for already things in France are not what they were even a fortnight ago. While everyone has been glued to the local elections, President Sarkozy has, to use the French word, re-looké his style. Long gone are those unflattering jogging opportunities making him look so ridiculous, more recently the heavy gold wrist-watches have dropped off, the helicopter-man Ray-Bans have been binned. What his minders call “an adjustment” has taken place, quietly, behind closed doors. Hours in front of the mirror to eliminate the stabbing finger and those irritating facial tics, trying to coach some gravitas into those absurd eyebrows. Gone are the flying visits to factories, farmers or fishermen (too common for a head of state, anyway he is too easily wound-up) in favour of solemn, weighty events more in keeping with a president: commemorating the courageous but doomed resistance on the Glières plateau in 1944, for example, or launching a submarine. In short we are being led to expect that the ten month-long Act I of his presidency is finally over (a nightmare, with moments of high farce). Tomorrow we may expect Act II, featuring a reformed leading-man.
For Monday is also the Day One of the new reforms which, according to Mediapart, an on-line newspaper run by four of France’s best journalists which begins life today, are going to rain down upon us. Having warmed up his team on pensions, over-time payments and the principal of flexi-security, the real work of changing France is set to start on Monday, they say. This is not a mere plan de rigeur suspected by the Socialists but structural reform at its deepest level, called impressively La Révision Générale des Politiques Publiques. According to Mediapart it will be “un ensemble de mesures transformant en profondeur l’architecture même de l’administration ou certaines règles de la protection sociale.” Employers’ charges are being reviewed, a complete over-haul of the tax system has been envisaged and is being drawn up to make both charges and tax simpler, clearer, more “competitive and attractive”. Some social security benefits may be abolished, as well as perhaps “1,000 special rights” currently enjoyed by some fonctionnaires. Even the partial privatisation of the nuclear-power generator Areva is being worked on (which, if true will cause much controversy). The over-riding aim is to reduce public spending and honour France’s commitment to some sort of balanced budget by 2012. The question is whether that rather academic ambition interests the French, or whether they will demand something more immediate and solid to improve their fast-sinking purchasing power – said to be their number one concern.
If the journalists on Mediapart are right, however (and their informers seem to be the very people working on these reflection groups), then the President is being as good as his word and is not letting his party’s defeat at the local polls influence or dilute his reform strategy. Which is all to the good. For the next week or so the French press will be asking itself the ultimately futile question as to whether today’s vote was a sanction or not – but Sarkozy looks to be using that as cover to push forward his long-awaited reform programme. He won’t have an easy time of it: even last autumn when the government fixed its budget for 2008 oil was at a paltry $73 a barrel (now $110), growth in France was estimated at 2 – 2.5% in 2008 (now revised to 1.5%), the euro was at 1.37 for a dollar (now it’s at 1.55). The next few weeks will be vital to Sarkozy’s longer-term credibility and survival.
March 17th, 2008 at 3:54 pm
Given the euro-dollar spread, and that oil is priced in dollars, I’ve seen reports saying the price of oil in euros is about the same as it was back in the fall. And while the rise of the euro might have a big impact on corporate profits, isn’t the problem more that french exports to Germany and the UK will be hurt (as those countries will suffer more from an uncompetitive euro/pound).
That’s why I am curious about the purchase power comment — it seems the real economic problem is creeping inflation — and I agree with you I don’t see how these structural reforms will help.
March 18th, 2008 at 8:30 am
The problem as I see it is that most people (in France or anywhere else) don’t see any connection between the practical problems of buying food in the supermarket and the vague theories about exchange rates/balance of payments, which they follow with bemused indifference, whereas they can see their grocery bill increases. But then people’s perception of economics/money is a source of constant amazement: even as they complain about higher prices all round, apparently the number of French people booking their summer holidays in the States has rocketed because, they say, “it will be cheaper”. It would be cheaper to stay at home - but apparently that isn’t an option.
You are right that the real economic problem is creeping inflation - which the French president recently rubbished by saying something like inflation is nothing more than an accounting ruse to scare people and half a percent here or there makes no difference! That is because he is in a political fight with the ECB whose primary and principal job is defined as stemming inflation.