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.
