François Hollande: private lives, public spending

http://www.theguardian.com/commentisfree/2014/jan/14/francois-hollande-private-public-spending

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Who would envy François Hollande? Twenty months into his premiership, the second Socialist president of France is on a rollercoaster without any highs. His approval rating is stuck in the low 20s, his country's economy, the second largest in the eurozone, is regularly attacked as the "sick man of Europe", with unemployment double that of Germany and economic growth flatlining. He is derided at home as a "Flanby" – a wobbly pudding – for his poor leadership, and to top it all is pursued by a sex scandal (albeit one enjoyed by almost every other French president in history) that has seen his long-term partner Valérie Trierweiler taken to hospital with a "severe case of the blues".

It is in this context that Mr Hollande on Tuesday launched his new strategy to turn around the French economy, and his own fortunes with it, by edging further from the policies of high taxation on business and the wealthy that he espoused during his election campaign. He pledged instead to cut public spending by €50bn between 2015 and 2017, and cut tax for businesses in return for a commitment to hire more workers.

There is precedent to what some may see as Mr Hollande's drift to the centre in the volte-face executed by the first Socialist president of France, François Mitterrand. Superficially at least, there appear to be several parallels between the two men: Mr Mitterrand, like Mr Hollande, came to power at the head of a leftist coalition, in Mr Mitterrand's case an alliance with the Communists, four of whom he appointed to cabinet. In an echo of the "war on finance" Mr Hollande declared in January 2012, Mr Mitterrand pledged a "complete rupture" with capitalism. In his first months in office in 1981 Mr Mitterrand embarked on a spending and nationalisation programme that scared the markets and brought about a collapse of the franc so serious that export of the currency was banned. Then, in a remarkable volte-face, Mr Mitterrand introduced austerity and prioritised the war on inflation. He survived 14 years in the Elysée, where he produced enough progressive reforms to become, to some, the most successful leftist leader of a major western European country.

Mr Hollande's change of heart is nowhere near so momentous. Despite the election rhetoric, his Socialism was not as dyed in the wool as it seemed. Mr Hollande was a protégé of the moderate Jacques Delors, and his first substantive pro-business gesture came a few months after his election with the announcement of a tax credit designed to lower payroll charges and an ambition for the state to spend less. In a brief New Year's Eve speech two weeks ago he pledged to cut spending in order to lower taxes and, unusually for a Socialist, spoke of abuses in the social welfare system. In this context, Mr Hollande's new announcements are less a U-turn than a slow reveal.

Will his prescriptions work? Even as southern European nations show some signs of recovery from the 2008 financial crisis, France's economic troubles – including a broken banking system – could yet blow the euro into a new and dangerous phase. Some reform is needed, but the pertinent question is whether Mr Hollande will be able to deliver it. The quality of life in France and its welfare system have long been the envy of the world, and French citizens have uncomplainingly paid high levels of tax for free education and good healthcare, pensions and public transport. Nevertheless, the crisis has already put the social fabric of the country under pressure, and however much Mr Hollande wishes to trim bureaucracy and find efficiencies, cuts mean pain, and in France pain often means industrial action, street protests and a rise in the vote for the National Front.

Mr Hollande has a little time: his Socialist party does not face its next truly testing election until 2015. If he can manage the delicate task of reducing public spending without provoking a crisis he may yet last as long as the first Socialist president. Few, however, would bet on it right now, and to do so he will need every ounce of credibility he has left.

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