Is The French Social Model Now Bust?

french-flagEurope is in crisis and with the looming euro elections #EP2014 political minds are being forced to confront ugly truths, no more than in France. Frances economy is stagnating at best, and declining at worst with an anemic growth rate and the stubborn unemployment figures that will not budge and with a ever growing public debt the size of a mountain which no one knows how to solve.

President Hollande is the man at the helm, and at times he seems to be a political contortionist. When he first come to power he lurch very much to the left blaming France’s problems on the Anglo Saxon capitalist model, he would go the 3rd way and adopted a sort of Tony Blair type of thinking. Well that was only going to take Hollande so far before he was rumbled and found out. The harsh truth is Hollande talked a great deal but did very little in the way of tackling France’s chronic lack of competitiveness and unhealthy state finances.

Any French politician left or right who really wants to reform France’s economic problems as to confront Frances powerful unions, and Hollande did what all French politicians have done before him, he backed down and ate a big plate of humble pie. To be fair Sarkozy was no better at tackling the thorny issue of the French unions. Compromising is a healthy thing but too much compromise gets you absolutely nothing in the end, and thats how the French economy as got itself in a deep hole, constantly backing down from hard decisions that no one wants to make. Hollande promised another 50bn-euros (£41.5bn; $68bn) of spending cuts, but always kicking the can a long way down the road?

The French have always done things the French way, but now with the euro crisis the game as changed, now even the Germans are beginning to question the French model of generous state pensions, jobs for life, and long holidays. French public spending is around 57 percent of national output – some 12 points more than in neighbouring Germany. Merkel wants some movement in reforming Frances bloated public sector, and recently Hollande promised more jobs but the extra jobs never appeared so he swung to the right alittle, declaring to be now more business friendly, cut state spending and simplify paperwork for companies? Problem is not many people believe him, making promises is the usual French trick, acting upon them comes the delay, excuses, and the political fudge the French have grown accustomed to.

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Its like a political game of musical chairs, France always managed to grab a big euro seat, but now may be caught standing with no where to sit. In many ways France as always been more in tune with the big state cultures of southern Europe, addiction to complexity and lots of government jobs with a struggling private sector. Then something happened, the euro crisis come along and as shone a light in all the dark corners of cosy government, the bad practises and all the hidden old habits. I believe France is going to have to face real hard choices, will the French model expand or contract, adapt or die. Is Hollande really ready to face these tough challenges? but them are the French themselves?

France desperately believes in the whole euro dream, but Germany cannot carry all the burden by itself, France must share its load, and that means economic reforms, taking on the unions and cutting the French public sector, some say even big drastic reforms to get France back in the competitive world. There are the all important #EP2014 euro elections in May, so its fast becoming a make or break time for the whole euro project dream. Question is will the cherished French model survive?  I very much doubt it.

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