The Economist: Francois Hollande: Battling French Decline

Francois Hollande has lost popularity faster than any French president in modern history, and been roundly criticised for a lack of leadership. Yet it was a remarkably serene Francois Hollande who defended his first six months in office at a press conference in Paris on November 13th. Betraying no sign of panic or pressure, the Socialist president declared that "decline is not our destiny" and asked to be judged not on "the state of public opinion today, but the state of France in five years time". Mr Hollande gives plenty of press conferences when traveling abroad, but this was the first he has held in Paris in the quasi monarchical tradition of Fifth Republic presidents, starting with Charles de Gaulle. Standing in the salle des fetes, the grand reception room of the Elysee palace, with rows of government ministers seated to the side like royal courtiers. Mr Hollande chose a setting that broke with his declared aim of being an un-stuffy "normal" president in touch with the people. He promised to repeat the exercise every six months. The main difficulty Mr Hollande faced was to explain to the French why he has begun to do things that, during his election campaign, he either vowed not to, such as increasing the rate of VAT, or that he scarcely mentioned, such as increasing the rate of VAT, or that he scarcely mentioned, such as cutting public spending. Having devoted most of his first four months to policies that appealed to his left wing base, such as a small rise in the minimum wage, or a new top rate of 75%, Mr Hollande has now begun belatedly to face far tougher decisions over public spending and competitiveness. He has promised to bring down the budget deficit to 20 billion Euros of tax increases and 10 billion Euros of budget savings in order to do so. Yet these calculations are based on growth estimates for 2013 of .8%, which few outside economists consider realistic. The French economy, according to the Bank of France, is expected to contract in the fourth quarter of this year, and probably did so in the previous three months, following three flat quarters. So further budget cuts are all but inevitable next year.