“France is a mess,” says Paul Ames on Globalpost.com. The latest data suggests that the economy is sliding back into recession after stagnating in the first half of the year. In these circumstances, France “can ill afford fresh political uncertainty”, says Economist.com’s Charlemagne blog. Unfortunately, that’s what it’s got.
The reformist prime minister, Manuel Valls, survived a no-confidence vote in parliament last month. But rebels in his Socialist party, who oppose reforms such as cuts in payroll taxes for business, will continue to try to thwart change.
In any case, the measures seen so far hardly add up to the wide-ranging structural reforms France is widely deemed to need to improve its long-term growth rate.
Moreover, the Socialists lost their majority in the Senate, France’s upper house. The Senate can now delay, or water down, legislation proposed by the lower house, raising uncertainty.
The outlook is unlikely to improve for some time. Near-term, the political wrangling will undermine confidence and investment further, as Capital Economics points out. Ongoing austerity will also dampen growth.
As for a reform push in the next few years, a possible return to the presidency by Nicolas Sarkozy, 2012’s defeated centre-right candidate, doesn’t bode especially well.
He came to power in 2007 promising a ‘rupture’ with France’s social model, only to retreat at the first sign of resistance from vested interests. “France desperately needs economic leadership,” says Louise Cooper in The Times. “Instead, it has paralysis.”