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One year in to Hollande's France. How are things going?


Sync

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Hollande was elected one year ago, a sweeping, comprehensive victory that gave the French left complete control of the Presidency and parliament, giving him a mandate unseen in decades.

Hollande promised change.
  • Higher taxes for the rich (A whopping 75% rich tax)
  • Lower VAT
  • Higher corporation taxes
  • Crack down on tax avoidence
  • Protect industrialisation in the country.
  • Reverse unemployment by the end of 2013

Unfortunately it's not going to plan.

It started terribly with VAT going up and corporation taxes being reduced.

Francois Hollande lurches Right in historic U-Turn to save French economy - Telegraph

Hollande's team had to admit getting their figures wrong immediately after the election and infact needed to increase VAT and reduce business taxes. This started a drop in support that hasn't let up.

The 75% tax was struck out by the Supreme Court as being "unfair", but it still spooked the rich, with an increasing amount leaving. Beloved national hero Depardeau attracted the most attention by his flirtation with Russia and Belgium, but many companies chiefs have also left, and more importantly: Those companies are saying they're going to recruit management from outside of France as a result of this:

Top executives join France exodus - FT.com
But Bernard Charlès, chief executive of Dassault Systèmes, was sharply critical of the high tax policies of Mr Hollande’s Socialist government, telling Le Monde newspaper in an interview: “Residing in France has become a big handicap. Very largely, our hiring of top managers will have to be done elsewhere than in France.”
In his (Second as president. Seriously) Thursday press conference he declared the worst over. On the day it was announced France is in a double dip recession.

The crack down on tax avoidance was hit when the budget minister had to be fired for.....avoiding taxes. In Switzerland. He's not exactly going quietly:

Meanwhile, Hollande’s disgraced former budget minister, Jerome Cahuzac – who lied to parliament about his tax fraud – has accused the president of “telling lies worse than his.”
Cahuzac said: “It is less serious to lie for 15 seconds before 577 MPs than to lie for a whole year about the state of France, as Francois Hollande has done.”
Industrialiastion....well no. Some of the sites Hollande actually campaigned at, promising keep open have closed, with a bit of a mess from the government about the possiblity of nationalising them:

French steel furnaces mothballed amid ‘broken promises’ by Hollande | Inquirer Business

Unemployment is near 11% now (up 1% since he took over), a record high. Hollande made this his number one priority and it's stalling badly.

The social side has seen him utterly underestimate the ferocity of discontent amongst the minority of people opposed to gay marriage, which he signed into law this week.

Added to the above there's an upcoming documentary where Hollande allowed camera's to follow him around for his first months in office. By all accounts he comes out of it as dithering and unfamiliar with the details of issues.

It's all combined into a pretty horrific polling situation. He's now the most unpopular president ever with only 25% of people approving of him.

And Sarko hasn't gone away. Flush with cash from investment gigs, the feeling is that he's saving a warchest for the next election, one that he's predicted to win handily at this point.

The left need to have a period of introspection to decide how they're going to stabilise, because right now the house of French socialism is showing signs of collapse.
 

Clanrickard

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I was in France last week. They were horrified to hear public sector had taken cuts of up to 15%. They said it would never happen in France as there would be strikes. The attitude of the French was not an inch. I don't see how the Socialists cannot drag France out of recession unless they break their promises. I also don't see how nay government can get elected by openly stating that they will take the steps that need to be taken to get France back on track.

They have not balanced a budget since 1972 and as a leaked German parliamentary report has stated all the efforts to rectify this have come through taxation. They simply have no more room to increase taxes so cuts are all that is left and yet the French public seem not to be aware of this and live in some sort of bubble where they think their pay rates and welfare can continue on indefinitely.
 

Sync

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Yeah Hollande's just dead wrong when he says the worst is behind them. Because of the extremely generous welfare rates a 1% increase in unemployment has a far higher impact on the purse than it does in the UK or even Ireland.

They've got 2 years to get their deficit down to EU requirements (This after an extension) that means changes to pensions, changes to welfare standards. This is what he needs to focus on, not starting some fight with the UK/Germany/EVERYONE ELSE IN THE EU over fastracked integration.

I'm surprised his Thursday speech didn't get more focus over here.
A beleagured President François Hollande went on the offensive today calling for an “economic government” for the Eurozone and “political union” in Europe within two years.

Stung by accusations that he has been too passive in his first year in office, Mr Hollande rolled the dice on the future of the European Union - to the potential embarrassment of both David Cameron and the German chancellor, Angela Merkel.
This is just delusional. How can he think this will happen? What does he think the impact of an "economic government" would do to France's welfare and tax structure?
 

Clanrickard

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This is just delusional. How can he think this will happen? What does he think the impact of an "economic government" would do to France's welfare and tax structure?
Exactly. A Eurozone government would be tough on deficits and balanced budgets.
 

Sexual Harassment Panda

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Exactly. A Eurozone government would be tough on deficits and balanced budgets.
That's the point. He knows what needs to be done to fix the country and he knows that if he were to do it there would be riots on the streets. He wants to externalize the risk.

It also strips back the democratic process because as French or Irish people we don't pay much heed nor have much say in how Europe is run. So decisions at the European level are very difficult to punish at the polling station.

All the while our elected representatives can still swan around as presidents and prime ministers even though perhaps 50% of the responsibility has been passed to europe. They never have to make difficult decision and they have the bogey man of europe to blame everything on.

He desperately wants somebody else to fix France for him.
 

Sync

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He desperately wants somebody else to fix France for him.
That's really what Thursday felt like to me. "I've tried for a year. Too hard. Let's get a euro government to fix everything". He's basically proposing to give the keys to Germany, he just seems completely out of his depth in this role.
 

Analyzer

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France peaked in the 1970s, and has been going downhill ever since.

France is on a long term trajectory to disaster. And it is committed to getting there. The resolve is unalterable. People who do not agree usually leave the country and go abroad.
 

Honecker

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France peaked in the 1970s, and has been going downhill ever since.

France is on a long term trajectory to disaster. And it is committed to getting there. The resolve is unalterable. People who do not agree usually leave the country and go abroad.
I'd say France peaked in 1870 myself. They never recovered from the Franco-Prussian war.
 

Thac0man

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That's really what Thursday felt like to me. "I've tried for a year. Too hard. Let's get a euro government to fix everything". He's basically proposing to give the keys to Germany, he just seems completely out of his depth in this role.
Its an odd one this. The problem is too big for any one country to handle, but Hollande (and he has no choice in this) must remain dedicated to sustaining certain sacred cows of the French left. Although it is unfair to lay the blame at Hollandes feet for the French economic mess, whats left to lambest him with is the hollowness of anti-austerity policies in their current form.

While we have enshrined utopian saleries and conditions of employment for our public service into law, the French went further with their 38 hours working week. The electorate want their lot improved, but scream blue murder at the prospect of having to work harder. So Hollandes promised solution was to increase public sector employment (by 80.000). But with or without austerity, where is the money? It the same problem all over.

The anit-Austerity campaign that Hollande very much helped crystalised is BS. It comes only at a time when investment in the growth the Private sector economy is needed, but is only offered in the context of stopping cuts to those already in receipt of Public money, or in the care of the public service. That is what is becoming clear, and no amount of socialist policies will be able to change that. Why? Because they can not endorse private enterprise. Hollandes attempt to impose 75% tax on high earners instead of promoting investment was a disaster.

What is ironic is that higher watermark socialist policies for the few and watered down socialism for the masses, were in the main implimented by right of centre parties. Why? Because bread for votes and buying industrial peace is not the perserve of the left. So as the left has no actual realistic policies it can offer and call its own, what has the traditional Left got left to offer? Having seen general socialism accepted as normal, they can take comfort at having attained something. But now thats done their thunder is spent and they seem reluctant to tend the roots of economic prosperity, ie. the private sector economy. I suspect the traditional left has entered a cul de sac, and if they do not have the stomach to make the occasional right turn, they will be stuck there.
 
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Sync

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It's hard to know if this is a sign that socialist policies won't work though because of the complete mess the administration has made. The socialist plans were based on numbers that they simply got completely and utterly wrong. It could just as easily have been a right wing party that got elected based on plans based on worthless figures.
 

Glaucon

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Describing Gérard Depardieu as a "beloved national hero" is amusing, to say the least.

Hollande is one year into a five year term, though conditions are hard, progress has been made; he has not been helped by the wave of scandals to have hit his administration (Cahuzac), or the questions over Ayrault's ability to rule his cabinet; or indeed the furore sparked by rural conservatives and hard right Catholics opposed to gay marriage. However, if one judged Ronald Reagan or Margaret Thatcher (or indeed François Mitterand) one year into their respective terms, they would have all been viewed as unmitigated economic disasters.

It is too early to proffer a realistic judgement on Hollande's administration. France remains a larger and more industrialized economy than Britain; the largest in Europe outwith Germany. France's work force is extremely competent, productive and highly qualified. Hollande is aware of the need to liberalize, decentralize and debureacratize, which is beginning, however slowly. France is an old dame and will only be changed slowly; the situation inherited by the Socialist government was atrocious and things were always going to get worse before they got better. Judgement on his leadership will come later.
 
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Sync

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It is too early to proffer a realistic judgement on Hollande's administration.
It's not too early to judge him on the immediate changes he promised. He promised an immediate tax increase. He promised an immediate drop in VAT and rise in Corp tax. He promised to decrease unemployment by the end of 2013. I'm judging him on the complete failure to achieve any of those promises.
 

Glaucon

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It's not too early to judge him on the immediate changes he promised. He promised an immediate tax increase. He promised an immediate drop in VAT and rise in Corp tax. He promised to decrease unemployment by the end of 2013. I'm judging him on the complete failure to achieve any of those promises.
It's May 18, 2013, on December 31 let us see where we stand. As for the rest, soit. True judgement on his performance will attend later.
 

Sync

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It's May 18, 2013, on December 31 let us see where we stand. As for the rest, soit. True judgement on his performance will attend later.
Right. And if someone wants to do a 2 year/3 year/5 year breakdown they can do that too. The one year breakdown is of a man who not only has failed to deliver the increases/decreases he promised within that year but has actually done the opposite.

It's a breakdown of a man who has seen senior people leave his government after less than a year and slate him, a guy who has the lowest ever presidential approval rating.

Sure things might get better. His solution of getting a European government in place to make the decisions for him might work and this European government will fix everything for him. A possibility. In the mean time: 2 years left to get the budget deficit down. Fewer ideas from him on how to do that.
 
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Analyzer

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Describing Gérard Depardieu as a "beloved national hero" is amusing, to say the least.

Hollande is one year into a five year term, though conditions are hard, progress has been made; he has not been helped by the wave of scandals to have hit his administration (Cahuzac), or the questions over Ayrault's ability to rule his cabinet; or indeed the furore sparked by rural conservatives and hard right Catholics opposed to gay marriage. However, if one judged Ronald Reagan or Margaret Thatcher (or indeed François Mitterand) one year into their respective terms, they would have all been viewed as unmitigated economic disasters.

It is too early to proffer a realistic judgement on Hollande's administration. France remains a larger and more industrialized economy than Britain; the largest in Europe outwith Germany. France's work force is extremely competent, productive and highly qualified. Hollande is aware of the need to liberalize, decentralize and debureacratize, which is beginning, however slowly. France is an old dame and will only be changed slowly; the situation inherited by the Socialist government was atrocious and things were always going to get worse before they got better. Judgement on his leadership will come later.
well...I suppose you did get that bit right.

As I say, France is on a long term trajectory to disaster, and has exactly the politicians (across the spectrum) to get there.
 

Glaucon

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well...I suppose you did get that bit right.

As I say, France is on a long term trajectory to disaster, and has exactly the politicians (across the spectrum) to get there.
Meh, the views of a right-wing isolationist anti-EU loon can be safely dismissed.
 

Analyzer

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Glaucon - you are a bulls!tter. What you really want to say is that any opinions that disagree with yours, are to be dismissed.
 

Clanrickard

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Meh, the views of a right-wing isolationist anti-EU loon can be safely dismissed.
Maybe so but the figures outlined in the OP cannot be so easily dismissed. Certainly less so than your slightly rose tinted view of the French economy. This from The Economist after Moodys downgraded France...........

Moody’s identifies two other reasons for its downgrade. First, deteriorating long-run economic prospects due to “the country’s persistent structural economic challenges”: “rigidities in labour and services markets” (high taxes and social contributions; high employment protection legislation), “low levels of innovation”, and a “gradual but sustained loss of competitiveness and the gradual erosion of its export-oriented industrial base”.

Second, Moody’s points to growing uncertainty about the fiscal outlook. It describes as “overly optimistic” the government’s forecast of GDP growth of 0.8% in 2013 and 2% from 2014. Mounting unemployment, and new tax increases, are likely to dampen consumption further. It anticipates fiscal slippage, and the likely need for more consolidation measures to meet budget-deficit targets.
When a Communist gets 15% of the vote you have got to wonder about the clarity of vision of much of the French electorate.
 
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