Opinion

Hugo Dixon

Is Hollande more like Rajoy or Monti?

Hugo Dixon
Nov 19, 2012 10:41 UTC

Is Francois Hollande more like Mariano Rajoy or Mario Monti? In other words, is the French socialist president condemned to be always behind the curve with reform like Spain’s conservative prime minister? Or can he get ahead of it like Italy’s technocratic premier?

I put this question to my fellow guests at a dinner in Paris last week. France is not in imminent risk of blowing up, as wrongly implied by the Economist magazine, which used a cover picture of a lighted fuse on baguettes tied together like sticks of dynamite. France is much richer than Spain and its people are more willing to pay their taxes than the Italians. French 10-year borrowing cost is only 2.1 percent, compared to Italy’s 4.9 percent and Spain’s 5.9 percent.

That said, the country has three deep-seated problems which could ultimately cause a mega-crisis: public spending at 56 percent of GDP is way too high; industrial competitiveness has steadily eroded; and the population is in a state of denial. The last cannot be said of either Italians or Spaniards.

Hollande certainly started off like Rajoy. During his election campaign, he did nothing to prepare the population for the sacrifices ahead. Instead, he made promises he couldn’t keep. The French president spent his first few months in office merrily attacking the wealthy, pushing up taxes and partly reversing his predecessor’s pension reform. This anti-enterprise message has knocked the trust of the business community – which is precisely the opposite of what France needs as it flirts with a renewed recession.

Hollande, like Rajoy, is a politician. He had to get elected, a process which almost invariably forces leaders to sugar-coat their messages. Monti, by contrast, didn’t have to face the ballot box and so hasn’t had to go back on any promises. He also had a clear idea of what problems Italy faced – unlike Hollande and Rajoy – and so didn’t need to waste time learning on the job.

Hollande’s sins more those of omission

Hugo Dixon
Mar 12, 2012 09:27 UTC

Francois Hollande’s sins are more those of omission than commission. The headlines might suggest otherwise. The socialist challenger to Nicolas Sarkozy as France’s next president has promised to cut the pension age to 60, tax the rich at 75 percent, renegotiate Europe’s fiscal treaty and launch a war on bankers. But these pledges aren’t as bad as they look. The real problem is that Hollande, who has a strong lead in the opinion polls, isn’t addressing the need to reform the country’s welfare state.

Hollande is a moderate. Like Sarkozy, for example, he is promising to cut the budget deficit to 3 percent next year, from 5.8 percent as estimated by the European Commission in 2011. But he still had to throw the left some red meat in the election campaign, which runs until May. That’s not just to prevent votes drifting to Jean-Luc Mélenchon, the far-left candidate. It’s also to avoid being outflanked by Sarkozy’s own populist attacks on corporate fat cats and bankers.

Still, the precise pledges probably aren’t what they seem, as I discovered on a trip to Paris last month.