This afternoon, French President Francois Hollande will expand upon his New Year announcement that French companies who agree to hire more workers could pay lower labour taxes in return and find themselves less tied up in red tape. Unemployment is running near to 12 percent and Hollande’s vow to get it falling by the end of 2013 fell short.

Unfortunately, the announcement has been eclipsed by his threat of legal action after a French magazine reported he was having an affair with an actress. France tends to overlook its politicians’ peccadilloes but with the economy in a hole, Hollande risks facing the charge that he should be focusing squarely on that.

To complicate matters his partner, Valerie Trierweiler, has been admitted to hospital following the reports. She will stay there for a number of days yet.
Given this is one of only two news conferences that Hollande has promised to give each year it’s hard to see how he can avoid it being hijacked by his personal life. As boxing promoter Don King was fond of saying: there are two chances, slim and none and Slim just left town.

The usual omerta about politicians’ private lives has been broken with opposition UMP leader Jean-Francois Cope calling it disastrous for the image of the presidency.

Even so, the odds are this squall will blow over so the far bigger question is about Hollande’s appetite for economic reforms. He has attracted criticism from abroad for being too timid in his shaking up of the labour market and the welfare state and is hoping this policy will prove to be a game changer.
It is risky. Giving a tax cut to companies means either raising taxes on ordinary people, cutting back state spending or both – not a vote winner any way round. But with his approval ratings at rock bottom, Hollande may feel he has little left to lose. He has already declared it time to stamp out abuses of a generous welfare state, and cut public spending to create room for tax reductions after a series of rises.