The missing economic debate in the French presidential election

Jacques Attali, French economist and writer is clear — whoever wins the presidential election faces an economic minefield that all candidates in the campaign have so far carefully ignored .

Here he points to the serious issues he believes are set to erupt:

“(Come election day plus one) either François Hollande is elected or Nicolas Sarkozy is re-elected. In both cases, the scene is set for a serious crisis because the country has been ignoring the real issues.

“Everyone knows and everyone has said that France must cut its public debt. Everyone knows and everyone has said the campaign is not about this at all. Everyone knows and everyone has said no serious discussion on the economy is offered by any of the candidates. Everyone knows and everyone has said that the electoral programmes put out by both the Left and the Right are completely unrealistic because nobody knows how to achieve the budget surplus that is required for 10 years at least from 2017.

“And yet, nothing changes. The campaign stretches before us like one large yawn. We are bored, we are not debating anything on the Right or the Left that relates to the real world.

“If the politicians go on like this until May 6 (the day before the second round vote) this is what we can expect to see happen.

“On May 7 with François Hollande elected the Right will face a serious crisis and blow apart, to the delight of the National Front.

“The new President will announce that the financial situation is appalling, far worse than has been reported previously, and he must look at it very closely before taking any action. Financial markets, on which three-quarters of the funding of our public debt depend, will read the signals and widen the spreads on the loans the state needs in May to pay its wage bill. Lenders will demand the President immediately and as his first priority, make very brutal cuts even before the parliamentary elections in June.

“So as not to lose the election the executive will dither and refrain from announcing anything serious. After the (parliamentary) elections which the Left will win, it will accuse the Right of having hidden the truth about the shocking state of the national accounts and also blame them for all the tough cuts and tax rises that have to be introduced. The government will announce that it must cut spending by at least 20 billion euros in 2012 and, if growth does not follow — which is more than likely– twice that amount in 2013, double that again in 2014 and more again for the next 3 years. There will be no question of any kind of spending largesse whatsoever for the entire five-year Socialist presidency.

“On May 7, if Nicolas Sarkozy is re-elected, the Left will face a serious crisis and the Socialist Party will blow apart. Some of its members will join Jean-Luc Mélenchon, who will become the leader of the opposition, the Right will be in a better position to deal with the loans maturing in June and will win the legislative elections, to the applause of cautious market forces.

“But then the Right will also in July reveal that the budget deficit in 2012 will exceed that currently set out in the accounts – because,  they will say, of a number of errors that were impossible to predict earlier. To meet the big reductions in public debt demanded by the lenders, the Right will introduce savage cuts in social spending but not raise taxes on the wealthy. This will bring about a decline both in growth and tax revenues. The new Left will then mobilise and put millions on the streets; strikes will grow. Markets will start to worry. Interest rates will rise massively. The crisis will  intensify for the full five year term of the re-elected president.

“In both cases, the country will pay the price of an election campaign that has failed completely. Not through any the fault of the candidates nor of the media. But entirely because the French elite has proved incapable of knowing when to end the partying and the good life, the phoney war as it were, and the misleading light-headedness of its current position.”

Jacques Attali

• Meanwhile Jean Pisani-Ferry, the French head of the Bruegel thinktank in Brussels writes: ”France, which nurtured the idea of the euro from the outset and, 20 years ago, won over German scepticism, is now having second thoughts. It does not know any more where its own project should lead to. A large segment of public opinion sees Europe as a source of constraints and the Trojan horse of liberalisation and globalisation: ”Germany’s undisputed economic dominance and its policy assertiveness are a source of anguish.”

Related articles

• French Socialist’s big idea: tax the rich (seattlepi.com)
• French voters abroad prefer Sarkozy, but only just (firstpost.com)
• On the road with ‘Comeback Kid’ Nicolas Sarkózy (itv.com)
• French election 2012: Nicolas Sarkozy ‘laying trap’ for Francois Hollande (telegraph.co.uk)
• Socialist Campaigns Against Sarkozy, ‘Big Finance’ (npr.org)
• Sarkozy get polls boost (worldviewtonight.com)
• France’s Presidential Hopefuls Look More and More Extreme (businessweek.com)

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