Hollande's France is a preview of Miliband's Britain
To see what a future Miliband government would look like we do not need a crystal ball, we simply need look across the Channel
As we start the New Year there is at least one head of state who will be glad to see the back of 2012. France’s Francois Hollande has had a rough year with a weakening economy accompanied by a significant drop in popular support. To add to his woes France’s constitutional council struck down one of Hollande's flagship policies, the 75 percent top income tax rate for those individuals earning over one million Euros a year.
The verdict of the council has made Hollande’s government appear out of its depth and incompetent, failing to implement a key election pledge. The decision of the great French actor Gerard Depardieu to ‘go Galt’ and depart to Belgium was a PR disaster the President could have down without.
Whilst much of the focus on the Eurozone crisis has been on Greece, Spain, and Italy, 2012 also saw the position of France, the Eurozone’s second largest economy, rapidly deteriorate.
On November 9th, Reuters broke the story that the German finance minister, Wolfgang Schaeble, had asked a panel of advisers to look into plans to reform the French economy due to the deteriorating situation. Meanwhile, Laurence Parisot, the head of the employers' association Medef, has said that French business leaders "are in a state of quasi-panic”.
How things have changed since April when the French election was held. This was no ordinary election; it was, in the clichéd jargon of political campaigns, a ‘change’ election.
The election of Francois Hollande was supposed to usher in a new era in which the failed policy of radical austerity would be replaced by one of moderation in which it would be ensured that the rich pay their fair share.
Yet we no longer hear the praise of Hollande from left-of-centre commentators that we used to. Not even a year into his term, the French economy is in dire straits, buckling under the weight of tax rises and government spending.
Hollande, since coming to power, has seen France lose its triple A credit rating, unemployment hit 10.7 percent, youth unemployment reach 23 percent, and the loss of 30,000 jobs in the month of November alone. Meanwhile, growth is anaemic at 0.2 percent in the third quarter.
In fairness, Mr. Hollande did inherit an economy with severe financial troubles; government spending accounted for 52 percent of GDP, and an inflexible labour market and still largely unreformed pension arrangements didn’t make things any easier. But France has now reached the position where its national debt is at 91 percent of GDP.
Mr. Hollande has played his poor hand badly and form would suggest he will do so again in 2013.
In July this year, a total of €4.4 billion in tax rises were announced. The budget for 2013 contains an eye watering €10 billion in tax rises on individuals and another €10 billion on businesses.
The mission of Francois Hollande and his supporters goes beyond a deficit reduction plan. These policies are driven by ideology not economics. The rhetoric from the administration has been that of economic patriotism. In other words, that businesses and wealthy individuals should make whatever sacrifices are demanded of them in the name of the common good. This sounds better than politicians wishing to retain revenue to buy off favoured groups to secure re-election.
But the mantra of economic patriotism alongside a growing role for the state is not confined to other side of the Channel.
“It is patriotic to have an active government using all the means at its disposal to give competitive British firms every chance to succeed”. These were the words of Ed Miliband in the Spring of 2012, calling for a government-backed ‘made in Britain’ mark.
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