Businesses, voters and tax payers are furious with embattled French President Francois Hollande after fears mount that France is on the brink of economic disaster.
Just five months after his election, the self styled ‘Normal’ president has alienated his supporters, and big business by his insistence on hiking taxes as well as the perception that he has done very little to halt the proud nations slide into what many are fearing could be a very deep recession.
“The situation is very serious. Some business leaders are in a state of quasi-panic,” said Laurence Parisot, head of employers’ group MEDEF. “The pace of bankruptcies has accelerated over the summer. We are seeing a general loss of confidence by investors. Large foreign investors are shunning France altogether. It’s becoming really dramatic.”
MEDEF, France’s equivalent of the UK’s CBI, warned that the threat has risen from “a storm warning to a hurricane warning”, adding that the Socialist government of François Hollande has yet to understand the “extreme gravity” of the crisis.
Businesses are furious over Hollande’s socialist policies that have let many feeling ‘unloved’ and has forced many to move to other parts of Europe. Hollande has introduced new deeply unpopular tax laws that have raised capital gains tax from 34.5% up to 62.2%. The UK only taxes this rate at 28% and Germany 26.4%.
The country’s economic growth has been close to 0% for the past five months with many businesses blaming Hollande’s devotion to tightening fiscal policy by 2% of GDP for the strangling of economic improvement. Instead of cutting France’s budget, spending has soared by 55% of GDP as the government desperately tries to fill the funding gap. Worryingly for the nation’s economy, new car registrations were down 7.7% in the third quarter from a year earlier. Unemployment has been creeping up, reaching a post-Euro high of 10.6%.
Economists have blamed Hollande for not grasping the situation even deriding his policies as damaging to the French economy.
“France needs more fiscal austerity right now like a hole in the head,” said sovereign debt strategist Nicholas Spiro. “They don’t have any chance of meeting their growth target of 0.8pc next year, but that does not in itself put French debt at risk. The real danger is contagion if things turn ugly in Spain.”
Hollande insists the country must cut spending and reduce its deficit. Those are the same goals as the unpopular president they voted out of office, says 18-year-old Virgil LeBlanc.
“The French voted just a few months ago to change the direction the country was heading,” he says. “But our efforts were obviously pointless because Hollande is pushing the country toward austerity just like Nicolas Sarkozy.”
It’s not just Hollande’s economic policy that the French people are angry about. He appears to have gone back on all of his election promises (shock horror for a politician to turn out to be a liar!), gotten himself embroiled in a sex scandal and according to many disgruntled French citizens embarrassed France during his visit the UK after allowing himself to look like a ‘dwarf’ alongside a British regiment which won battle honours at Waterloo and then occupied Paris during the Napoleonic wars. Others are annoyed at the perceived lack of action being taken by the President. Taxes are going up but job losses continue to rise and factories continue to close.
One thing is certain; it is going to take President Hollande a lot of effort to restore the French people’s faith in him and his policies.
As of 10:30am
The Pound to Euro exchange rate is currently trading at 1.2378
The Pound to US Dollar exchange rate is currently trading at 1.6080
The Pound to Australian Dollar exchange rate is currently trading at 1.5675
The Euro to US Dollar exchange rate is currently trading at 1.2989
The Euro to Pound exchange rate is currently trading at 0.8078
The Exchange rates are provided by TorFX a leading foreign exchange broker, offering excellent exchange rates for all your currency needs.