by Mitch Kokai
Senior Political Analyst, John Locke Foundation
France’s recent presidential election of Socialist Francois Hollande sent a bad signal about the country’s willingness to accept the reality of the nation’s fiscal woes. But the latest Bloomberg Businessweek explains that the picture might be a little brighter than one might expect — largely because Hollande will ignore much of his campaign rhetoric.
He’s likely to move slowly on the populist promises he made during the campaign and govern from the center, judging from his history and the predictions of his more middle-of-the-road supporters.
For Hollande, a tack back to the center will be partly by choice (his nickname is Mr. Normal) and partly by circumstance: Simply put, France’s financial situation is too precarious to permit Hollande to ignore deficits and risk a rupture with Germany. At 5.2 percent last year, France’s government deficit as a share of the economy is bigger than that of Portugal or Italy, two nations that have already begun to lose the confidence of bond investors.
Hollande will be forced to do more or less what Nicolas Sarkozy has done: appease the financial markets by controlling government spending, while making nice with Merkel, Europe’s paymaster. He may head France’s Socialist Party, but “there is not a chance in the world that Hollande would try to implement old-fashioned socialism in France,” says Thomas Philippon, a French citizen and adviser to the Hollande campaign who is an economist at New York University’s Stern School of Business.