Economic Interests

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French Fancy?

Who will the French fancy in this presidential election?

With the first round of the elections for the new French President done and dusted, now seems a good time to look at the two main contestants; Nicolas Sarkozy and François Hollande. Sarkozy is the current president and has received his fair share of blame for France’s troubles in the market. The French economy has stumbled and their downgrading by Standard & Poor in January summed up the lack of confidence from outside investors. But more than that, there is a feeling Sarkozy is just not well liked by the French people, he comes off as arrogant and out of touch, with his private life counting against him. This can be unfair on a president that has actually fared okay in tough times; he steered France through a difficult period during the euro crisis, pushed through an unpopular rise in the retirement age and has been active in important international conflicts – jointly leading the intervention in Libya. But his campaign has been poorly executed, he has tried to be perceived as the underdog (when already holding the presidential position) has ignored any talk of economic reforms (a trending policy in the rest of Europe) and has failed to trap Hollande (his biggest opponent) into discussing any policies of his own. He has focused too much on protectionism and immigration, where he has threatened to battle globalisation (surely too late) and to leave Europe’s passport free zone.


Hollande is the Socialist candidate and current favourite, whose campaign consists of two main ideas; a tax increase on the rich to 75% of their income and an anti-Sarkozy message. The first idea might grab the general public, where the rich and bankers have become scapegoats for their current troubles (justifiably or not), but the practical implications will leave France worse off. Any individual or company that falls into this tax will simply move across the border to other countries where the tax rate is considerably less – the UK top income-tax rate will be 45%. The second idea is smart and focuses on the idea that the French people want Sarkozy out more that they want him in power. Hollande has ignored talks of true economic reform too, but by trashing Sarkozy’s past economic performance he can quietly push those concerns under the rug.


The first round saw Hollande win with 28.4% and Sarkozy finish second with 25.5%, though the second round will be the most important and could go either way still. If Sarkozy doesn’t win this election, he will be only the second president in the fifth republic to not win re-election. Holland leads the polls for the second round, but the live debates could tip in Sarkozy’s favour as he has previous experience on TV and a willingness to expose Hollande on his policies without distractions.

First round results

The main issue to be discussed in these debates will be the economy. The French economy still remains strong; with an educated workforce, strong manufacturing in high end products and excellent private companies (with more firms in the Fortune 500 than any other European nation). But the country faces big problems; with unemployment high at around 10%, exports struggling against neighbour and rival Germany, public debt to GDP ratio at 90%, public spending at 56% of GDP (highest in eurozone) and undercapitalised banks. These issues need major reforms and France sticks out like a sore thumb in Europe as the only nation not taking drastic changes.  France also has important sway in the EU and if they were to crash, it would have a much bigger effect on the euro than Greece’s recent crisis.

Unemployment uncomfortably high 

Whichever president wins the elections will face big changes, even if neither is willing to admit it, and France will have to endure some tough times before the going can get good again. Is it what the French Fancy? Probably not, but it is what they need.


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