Annus Horribilus

AyraultThe Holland administration has had, without doubt, a thoroughly horrible 2013.

Indeed, the year of the snake was poised to be the year of all the dangers, with an uncertain economic picture, general social unrest, elections looming the following year, and a government that would little by little no longer be able to blame its predecessors of the problems the country was facing.

2013 was all of those and much worse. A double-dip recession (not statistically but certainly perceived), increasing unemployment, declining real wages, and a highly sophisticated and effective public campaign by the opposition against rising taxation, building an image of incompetence.

There were however breakthroughs, and indications that the government’s policy choices are perhaps not as clubfooted as an increasing number in France and abroad believe. Is that enough in light of increasing dissatisfaction, record unpopularity of the President and Prime Minister and a government that appears to be doubting itself?

The theme of the year has been consistently (and perfectly properly) tackling unemployment. At the end of 2012, President Hollande announced his determination to reverse the increase in unemployment (referring to the percentage rate of those in category A, those out of work and not in part-time or other employment).

There has been some largely irrelevant discussion about when the promise was to run from and to, but it was generally agreed that the government had promised, repeatedly, that unemployment would begin to go down by the end of 2013. Initial positive signs for the August figures turned out to be the result of a computer glitch. Other broadly positive figures in the autumn then gave way to a sucker punch in December showing that unemployment had begun to rise in almost all categories in November. In particular, youth unemployment, a horrific 25%, which had been dropping consistently thanks to a widespread (and expensive) programme of subsidised employment in local government and charities, began again to rise. This indicated what many had suspected: growth having flatlined throughout 2013, there was no easy way to create jobs to support a growing workforce.

Much discussion has occupied the French during 2013 as to why there hasn’t been a more natural rebound from the depths of the economic crisis.  The government has bet on a large amount of France’s return to growth coming from a halo effect of other growing economies, in particular the Eurozone and United States. Whilst the United States has seen a promising return to growth in 2013, the Eurozone remains moribund and its immediate outlook somewhat uncertain (although they should be some uptake during the course of 2014). The opposition, and in particular the UMP, have decried the government’s passivity to the country’s economic problems and promised a widescale liberalisation of the French economy, including drastic spending and tax cuts and the removal of reams of regulation built up over the last 40 to 50 years. That program is both spectacular, risky and incredible, given that two years ago the same people now proposing a liberal revolution were in power and disinclined to do anything like what they now propose.

Hollande has also correctly (and very shrewdly) reasoned that the economic and social revolution being proposed by Jean-Francois Cope would be fruitless, ineffective and lead to social unrest (if not downright social collapse). Instead he has chartered a course of consensus. At first, in the summer of 2012, this calmed the country, and led to the normalisation (even rendering it somewhat boring) of politics after the frenetic and psychologically damaging years of President Nicolas Sarkozy. However, the opposition’s ability to use language to define Hollande and his approach, rudderless, week and dithering, has begun to leave what may be an indelible mark. Hollande’s unwillingness to be a political strong man (whilst based on clear political reality and not a little self-interest) has left him open to these attacks.

The inability to self-define, the position, philosophy and choices being made, is causing frustration throughout the Socialist party. The broad consensus there is that the government’s problem is one of communication and not substance. The left of the party may complain that too much time is being spent focusing on businesses and what they get out of the social contract, but they know (at the moment) that they cannot do anything to significantly weaken Ayrault’s position. The fact that Hollande is able to announce a package for businesses in his New Year’s Eve address, without the left in uproar, indicates that he remains in political control (despite the image that the UMP projects).

So has any progress been made?  This past year has seen the reform of labour code (modest, but any reform of this immovable text should be seen as positive) the pension system (largely through the form of tax increases for employers and employees) and the development of a muscular foreign policy with to foreign interventions in Africa, both with the support of the United Nations and the local populations, in Mali and the Central African Republic.

So what does 2014 bring? In one word: elections. I’ll talk more of the local elections elsewhere, but for now it should not be underestimated how they will affect the political climate in France over the next six months. Whilst the local elections maybe an opportunity largely for the conservative right to demonstrate that under its new leadership it is making progress, the European elections will be a proportionally representative rout of the Socialists. Without a doubt, the National Front will make significant gains, probably coming first. Whilst this is a scary prospect, and will lead to far too much soul-searching (never underestimate the French capacity for navel-gazing even when every other western European country is facing a similar resurgence of extreme right forces) the outcome is not likely to be significant. There will be no major shift in European policy, the way that European institutions a run or the relationships between leaders it within the European Council, and in particular between Hollande and Merkel.

Instead the government will be on the defensive for six months and the opposition will be willing to promise ever greater, and more unrealistic, policies than before. Batten down the hatches: it’s going to get rough.


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