The sick man of Europe is France

We do not know if the German government discreetly tasked its five expert advisors to examine the situation of France, as the press on the other side of the Rhine has reported. The high-profile economists in the experts’ group have officially denied that any such initiative took place, while the insistence that there will be “No comment” from the Chancellor’s office nonetheless suggests that there is something to the story.

Be that as it may, the simple fact that such a request was not unlikely is a testament to Berlin’s concern about its neighbour. And sadly, it is a concern that is completely justified.

The initial French reflex in response to this state of affairs is one of irritation. That the Germans should assume that they can teach us lessons on how to reform France is both vexing and insolent. Ten years ago, the Federal Republic was the sick man of Europe, it has been consistently late in its management of the eurozone crisis, and no doubt it would be none too happy if it had to take advice from Paris on how to deal — to cite a random example — with its catastrophic demographic situation.

The second French reflex is to remark on the domestic political dimension of such an initiative. In answer to recent criticism of some of her decisions by the five experts, Angela Merkel remarked that you only had to compare the situations of Germany and France to see that German policy was better.

A major historical shift

Although understandable, these impulsive reactions should not be allowed to dissimulate the obvious point which is that Germany is concerned about the state of our economy, about its stagnation over the last three quarters, its deficits, and most importantly, the difficulty inherent in taking action to reverse a downward trend. Germany is right.

One single comparison is enough to highlight what is a terrible situation: according to Eurostat, the latest figure for unemployment in Germany is 5.4% whereas it stands at 10.8% in France. But the real difference is perhaps elsewhere: France, and it seems François Hollande, still consider that the current difficulties are temporary and that everything will improve when the traditional economic cycle is reversed in the latter half of 2013 and 2014.

In contrast, the Germans have long considered that what the French refer to as a “crisis” is in fact a major historical shift, which is why they have allocated themselves the resources they need to deal with it.

The reality is that we do not need the Germans to tell us that the Gallois report [on the competitiveness of French industry] and the government plan which followed it are first steps in the right direction, but only first steps. They are not enough to mark a turning point, and we will have to continue to work to acelerate change.

Comment

Sorcerer’s Apprentice gets a warning

**“Achtung!”, headlines Libération. “The Germans are no longer hiding their dismay over French economic policy and their alarm at the threats it poses to Europe,” the newspaper writes. “It’s no coincidence,” the paper adds, “that the five economic ‘wise men’ that are advising the [German] government have bashed France in their annual report released Wednesday, November 7.”

Libérationquotes one of them, Lars Feld, who has expressed his disquiet openly —**

The most serious problem in the eurozone at the moment is not Greece, Spain or Italy, but France, because it has done nothing truly to restore its competitiveness and is even starting to head off in the opposite direction. France needs to reform its labour market; of all the countries in the eurozone, it’s the one that puts in the fewest working hours.

Die Welt, in Germany, believesHollande “lacks a compass.” The French president, observes the newspaper, has already spent a tenth of his mandate as leader of the country “without anyone knowing where the journey is taking us" —

If we were to try to illustrate what the government euphemistically calls its ‘course’,” the newspaper muses, “we would get a confused graph, in many ways comparable to the one in Skyfall, the new James Bond film, where Q, the Sorcerer’s Apprentice, tries to find the code in the computer of the bad guy: when he does, he blows up his own shop.

The German daily also finds it ironic that François Hollande, whose “obsession is to do nothing the way his predecessor did” has finally opted for the solutions advocated by Nicolas Sarkozy for businesses —

The Socialists must admit that they’ve taken measures that Nicolas Sarkozy already proposed last spring: he wanted to work towards lower non-wage labour costs by hiking VAT. During the election campaign, Hollande had argued strongly against just such a measure. Today, he is the one pushing it through.