France’s finance minister Pierre Moscovici confirmed this week that the country is on course to cut 3 per cent of gross domestic product by next year, despite a socialist president being in power for 100 days. President François Hollande, the Socialist president, is planning to stick to the debt reduction targets set in motion by former president Nicolas Sarkozy. Some Socialists may have preferred Hollande to make a clean break from UMP policies, but Moscovici states that continuation of the deficit reduction plan will keep borrowing costs low. This may be slightly at odds with Hollande's rhetoric that harsh austerity measures are not the only path to growth. No doubt Hollande’s tax on the rich will help him to accomplish some of the savings targets, but the path to recovery may be a slow and tortuous one as there has not been growth in the French economy for the previous three quarters. No doubt the 2013 budget setting process that begins in September will be an interesting programme as Hollande seeks to protect jobs, boost growth as well as reducing the budget deficit.
A recent survey of French voters by Ifop for Le Figaro newspaper showed that a third of those that took part said they trusted Mr Hollande’s Socialist government on cutting debt, while four out of 10 thought he could find a solution to the Eurozone crisis with other European leaders. So Hollande has a lot of convincing to do yet. The Le Monde newspaper said at the weekend:
“After 100 days, Mr Hollande still needs to assert his leadership”
The French public may have been hoping that Hollande would have had more of an impact on turning the tide on the Europe wide austerity plan. We will have to wait and see how Mr Normal tackles the huge challenges ahead.
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