Hollande: This is a difficult time
BELEAGUERED French President Francois Hollande faced a new barrage of criticism yesterday, after announcing a programme of reforms that he hopes will lift the country’s stagnant economy.
In his first speech of the year – and amid intense scrutiny of his personal life – Hollande announced plans for a “responsibility pact,” committed to being “as vigorous as possible” to try to lighten the burden on French companies, and promised a €30bn (£24.95bn) payroll tax cut.
The cut will come in exchange for business promises to boost employment levels, and will be funded by trimming public spending.
But analysts are sceptical that the reforms will have any noticeable benefit, warning that Hollande has dodged the sort of major employment reforms pursued by other European countries.
“The important element missing here is serious labour market reform,” said Berenberg senior economist Christian Schulz.
“There’s nothing comparable to Schroeder’s reforms in Germany or Thatcher’s approach in the UK,” he added. “The environment is more benign and positive for reforms in France now that there’s more European and global growth, but they’ve started the reform process later on and not as convincingly, so they’re likely to continue to lag behind.”
James Howat of Capital Economics added: “There’s still a lot of uncertainty about how exactly it’s going to work … Hollande mentioned commitments for employers as part of his responsibility pact, which could be onerous depending on the detail.
“A €30bn tax cut is a big positive step, but like many of France’s reform efforts it’s not as radical as you might hope for. These things are easier to talk about than implement.”
The announcement comes after months of dreary news for the French economy. Business surveys during the fourth quarter were some of the worst in Europe, suggesting that the country may have dipped into its third recession since 2008.
The President also appeared to deliver a message to the UK on its membership of the EU, stating clearly that nations should not be making the case to leave.
After speaking for 45 minutes Hollande finally opened the floor to a question about his alleged affair with actress Julie Gayet, telling journalists: “Everyone in his private life can go through difficult periods. These are difficult times.” He added that he would not be drawn on the status of his relationship with first lady Valerie Trierweiler, but that he would issue a statement before his planned trip to the US at the beginning of next month.