French president Hollande with no credible plan
François Hollande promises and end to austerity
Article added on May 7, 2012 at 17:45 Paris time

A disastrous economic and financial situation
  
There was no doubt in 2007 that Nicolas Sarkozy was the better candidate than his opponent Ségolène Royal. On paper, in 2012, the situation was not much different. The socialist candidate François Hollande (*1954), incidentally the former, long-time companion of Ségolène Royal, with whom he has four children, had no executive experience at all. He is a no-name like Barack Obama, minus the Messiah's charisma; Hollande has been a dull Socialist Party leader for 11 years.

But President Sarkozy had been in power for five years already and not delivered enough. Furthermore, Sarkozy had been part of the previous center-right governments as a minister. At one point, the political right had to be made accountable of the present situation.

The consequence was a close 2012 presidential election with François Hollande winning 51.63% of the vote, ahead of the incumbent Nicolas Sarkozy with 48.37%. Some 46 million French voters had had the right to go to the polls on May 6. Only 80.35% did so. 4.66% of the cast votes were blank or invalid. That left François Hollande with roughly 18 million votes ahead of Nicolas Sarkozy with 16.86 million votes.

The Socialist victory had only been made possible by the fact that the candidate of the extreme-right, Marine Le Pen, said before the second round that she would cast a blank vote. In addition, the centrist candidate, François Bayrou, whose supporters traditionally vote with the center-right, said ahead of the second round that he would vote for the socialist François Hollande. Bayrou's argument was that, on one hand, Sarkozy had pandered too much to the extreme-right and, on the other hand, Hollande had promised to bring a moral attitude back to the office of the French president and to French politics in general. However, Bayrou cautiously stated that he did not agree with Hollande's economic plans.

Anyhow, the statements by Le Pen and Bayrou were the final nail in the coffin of Sarkozy's political career. The very volatile, ousted president had made too many enemies in the center and right political spectrum. Those were votes he would have needed to beat the weak, socialist candidate.

François Hollande promises and end to austerity

France's current economic and financial data as well as the country's outlook is not very promising. One rating agency has already taken off France's triple A rating. The country's labor market is too rigid. Red tape is omnipresent. Strikes are frequent. France's economy is already by 57% dominated by the state sector.

If François Hollande should implement his luminary plan to rise the tax rate for the top earners to 75%, he will definitively kill off an already weak growth expected to reach a meager 0.5% in 2012. France's public debt has already reached 86% of France's GDP. To service the debt alone will cost France's taxpayers some €45 billion in 2012 alone.

France's unemployment rate has reached 10%. The budget deficit is estimated to reach 4,5% of GDP in 2012. Therefore, this year again, France will violate the famous Maastricht criteria which ask for state debt not to exceed 60% of GDP and for the public deficit not to exceed 3% of GDP.

France is on an unsustainable path. The country needs more liberal reforms and not more socialism. The quicker François Hollande learns that lesson, the better for France and the EU.

Daunting economic and financial challenges lie ahead of France. François Hollande said at his Paris victory rally that: “Austerity can no longer be something that is inevitable.” But he has not come up with a credible, alternative plan (yet).

François Hollande is an intelligent, down-to-earth man with an excellent education. It is time for him to find back to common sense. Let's hope he only pandered to the left during the campaign, fighting off a serious attack from the far-left led by Jean-Luc Mélenchon, who managed to revive the Communist left.

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After the election is before the election

Although the French president has more ample powers than the American, François Hollande will have to work with the French parliament to implement his plans for France's future.

On June 10 and 17, 2012 the French parliamentary elections will take place. This will be the next great showdown between the political left and right. Will the French opt for a cohabitation? Awarding the Socialist's with the office of president and the Republican right with the office of prime minister as well as a majority in parliament could be one power-sharing solution. Or will the left mange a clean sweep?

Since François Hollande wants the left to succeed in the parliamentary election, he will have to persist with his left-wing rhetoric. He can't talk about sacrifices and labor market reforms. The French left will continue to live in a fairy-tale world until mid-June.

The rude-awakening will come afterwards. If it will be too brutal, strikes and an even deeper disenchantment of the general public with France's political leaders will be the result. France is not in deep shit yet. But if the crisis should significantly worsen again, the outcome could be disastrous. Vive la France!