Brief on France: Hollande’s last chance plan.

By Peter Spiegel
January 19, 2016

Le Monde called it François Hollande’s “last-chance plan”. Struggling with an unemployment rate that stubbornly remains above 10 per cent, and saddled with a promise not to seek re-election in 2017 unless joblessness falls, the French president on Monday unveiled a €2bn scheme aimed at reversing an “economic emergency” facing his country.

The measures themselves are mostly targeted at the young: a €2,000 subsidy for each young worker hired by small companies; creating 500,000 vocational training schemes; and a programme to boost apprenticeships. The price-tag may be high, but taken together the initiatives appear less ambitious than the so-called “Loi Macron”, an economic reform plan passed a year ago under the aegis of Mr Hollande’s youthful economic minister. That plan has failed to produce any signs that unemployment is dropping, raising questions over whether the new programme will provide much help.

As with the Loi Macron, Mr Hollande’s new plan seemed to please nobody. Reformers like Mr Macron and Manuel Valls, the prime minister, are viewed with suspicion from within the ruling Socialists because of their “liberal” views. But the measures backed by the two men never seem to go far enough to please business interests, either.

The French business daily Les Echos has a useful summary of reactions from business and labour leaders, with Medef, the main French employers’ association, offering a rather tepid endorsement by calling it a step “in the right direction.” The head Medef’s sister organisation for small and medium-sized businesses was similarly lukewarm, saying he was doubtful it would have any long-term effects. Predictably, the Républicains, as party boss Nicolas Sarkozy has re-branded the French centre-right, were withering in their criticism. The conservative Le Figaro quotes party spokesman William Larrivé calling the plan “an insult” to France’s unemployed.

Disappointingly for Mr Hollande, the failure to get unemployment under control comes even as Paris is over-performing on budgetary issues. Michel Sapin, the French finance minister, said this week that the government’s deficit for 2015 would be just €70.5bn, rather than the €74.4bn the finance ministry originally predicted. That should cheer the accountants in Brussels, who have grown exasperated with France’s inability to get its deficit below the EU ceiling of 3 per cent of economic output. After multiple delays, Paris is due to hit the target by next year, and the new figures – a combination of increased tax receipts and reduced spending – will help.

But pleasing Brussels appears to be doing Mr Hollande little good politically. After a brief pickup in the polls following the November terrorist attacks in Paris, the president’s approval rating has started to fall again. And as Le Monde notes, the French are in a particularly unsettled mood following the Paris attacks and the December political upheaval sparked by the right-wing National Front’s unexpectedly strong performance in regional elections. If this continues, Mr Hollande himself may soon be unemployed.

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