For France, the economic news just gets worse

While Britain basks in economic hope, its neighbour France faces a stark future.

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Battered by credit rating downgrades, alarming levels of unemployment, especially among young Muslims, and unaffordable welfare spending, France would be the symbol of European resistance to recovery – if Spain, Italy and Greece were not faring worse.

But the country prides itself on being among one of the great economies, the world’s ninth largest and Europe’s third (after Germany and the United Kingdom) using the test of “purchasing power parity”, higher on other valuations.

France’s performance is therefore a serious determinant of the state of health of the continent in general, and the euro zone in particular.

Before the national football team dramatically squeezed through play-offs to book a place in the 2014 World Cup in Brazil, the daily newspaper Le Monde drew fascinating parallels with the economy. It also touched on relations between the French and a large immigrant population with roots in the former Muslim colonies of the Maghreb and sub-Saharan Arica.

A front-page editorial said that in the more than 15 years since the night France won the World Cup on home soil, the mood of the nation had faithfully followed French footballing fortunes.

In 1998, the writer said, “that team – black-blanc-beur [describing the black, white and Arab make-up of the squad] – seemed to symbolise the spirit of summer, a united and conquering France, talented and moderate, able to use its ethnic melting pot as a collective force. The national economy had rediscovered growth of more than 3 per cent, the unemployment curve had been reversed and the president and prime minister, Mr Chirac and Mr Jospin, commanded record popularity”.

The contrast with today is stark. The opinion polls of 1998 demonstrated public satisfaction with the then “cohabiting” centre-right president,Jacques Chirac, and socialist prime minister, Lionel Jospin.

Now, the France that fights with limited effect against economic crisis is dominated by the left with a January polling confirming a dismal 24 per cent approval rating for François Hollande, the president.

When the Standard & Poor’s (S&P) credit rating agency downgraded France to double-A status, down two notches from the triple-A status lost two years ago, the analysis was unequivocal.

“We believe the French government’s reforms to taxation as well as to product, services and the labour market will not substantially raise medium-term growth prospects and that ongoing high unemployment is weakening support for further significant fiscal and structural policy measures,” S&P said.

France may have cried foul – the finance minister, Pierre Moscovici, condemned S&P’s “inexact judgements” – but external observers regard the criticisms as statements of fact.

Henrik Uterwedde, an economist from the German-Franco Institute, told the German broadcaster DW that it was going too far to regard France as another Spain. But he added: “The government faces a bundle of problems, and that’s what makes it so hard to act fast and in a way that’s convincing.”

The latest French target for meeting European Union deficit rules, reducing its deficit to 3 per cent of GDP, is 2015. But S&P is doubtful this can be met.

As Mr Hollande reflects on further possible damage by fallout from the extraordinary, almost farcical affair of his alleged scooter rides from the Elysée, in disguise, for romantic meetings with an actress, there seems little to cheer him.

Amid controversy over painful taxation policies, the kidnappings of bosses by workers facing redundancy and scepticism over his ability to revive the economy, the president has barely had time to smile at the Bank of France’s forecast that modest growth will be shown to have returned in the last quarter of 2013.

business@thenational.ae