- France will need two more years to bring its budget deficit under the EU’s ceiling of 3% of economic output
- With a population of 65 million, France faces an escalating battle against unemployment at 11%
- Government plans to spend 20 billion euros on infrastructure over the next decade
(CNN) — A failed 75% wealth tax on top earners, unemployment at a 16-year high and the lowest approval rating for a president in modern French history; this is the wreckage from Francois Hollande’s first year in office.
Hollande came to power on the country’s hopes of pushing back against Europe’s austerity drive. But, 12 months in, he is reeling from the rejection of his policies, scandal within his own ranks, and popular marches against his ineffectiveness at a time of crisis.
And the Socialist president dubbed “Mr Weak” by news magazine L’Express is facing an even more unpalatable future: One, according to one economist, in which he must turn on his core voters.
Anand Menon, a European expert at London-based think tank Chatham House, said Hollande faced tough choices with the country’s employment policies.
“He needs to get some kind of economic recovery or he’s not going to have a prayer of being re-elected,” Menon told CNN. “but he wants to do it without alienating his core vote, or his party, which is divided.”
When Hollande came to power he targeted the rich in his attempts to boost the government’s coffers. Now, in stark contrast to that tactic, he is reforming the labor market in ways that are raising the ire of unions.
On Sunday tens of thousands of protesters, including union members, marched on the streets of Paris to remonstrate against the Socialist president’s government.
The country’s economic pain is one issue fueling anger. But Hollande is fighting fires on other flanks too.
France — the eurozone’s second largest economy — slipped back into recession at the start of 2013. The country now needs two more years to bring its budget deficit under the EU’s ceiling of 3% of economic output, after the government conceded that weak growth meant the target for 2013 would not be met.
With a population of 65 million, France also faces an escalating battle against unemployment, sitting at 11%. Youth unemployment has soared to 25% as employers favor short-term contracts to offset uncertainty over the stagnating economy.
“The economic problem will lead to a catastrophe,” Eric Chreiki, 47, an IT consultant from Paris told CNN, “In the election [in 2012], I was afraid for the way of life and the democracy. And now, I’m really pessimistic,” he added.
Beatrice de Gourcruff, 50, an entrepreneur who runs a professional training business told CNN that Hollande is not in step with small business owners and employers. She said the French President does anything to “destroy” and “discourage” entrepreneurship.
But de Gourcruff praised the socialist government’s measures on gender and equality in the work place, adding: “They’re very involved in equality and social conscience… This is now a priority in France.”
To counter his collapse in public support, Hollande marked his first anniversary in office by announcing government plans to spend 20 billion euros on infrastructure over the next decade to revamp road and power networks.
It follows his attempts to stimulate growth and reform the labor market by passing a law in January the government says will increase flexibility for French companies and spur competitiveness. Further, the government is promising to lower capital gains tax to court entrepreneurs.
The political shift in tone came after Hollande attempts to slap a 75% income tax on those earning over 1 million euros led to some high profile millionaires, including actor Gerard Depardieu, to seek citizenship abroad.
Despite the tax being rejected by the constitutional court, Depardieu accused the socialist government of punishing “success, creation and talent,” and was eventually offered a Russian passport by President Vladimir Putin.
Meanwhile Hollande — who also promised to crackdown on financial institutions and tax dodging — is facing a backlash over the resignation in March of France’s budget minister, Jerome Cahuzac, who confessed he had been lying and had a hidden Swiss bank account.
“It’s a punch in the stomach,” Menon told CNN. “It allows the Right to create a narrative that says “not only are they failing people but they’re lining their own pockets” and that is a very powerful argument.”
Steven Ekoich, a professor at the American University in Paris, said Hollande, like many other leaders across Europe, inherited a very difficult situation. “He was dealt a weak hand,” he told CNN “but he’s played it very badly.”