With Mitt Romney now emerging as the Republican party’s man to take on Barack Obama in America’s Presidential elections, how are we to read and understand what is going on France, where the first round for who will be President will take place on April 22, with the decider in May.
France is in trouble – it has been in this state sinceΒ 1974, and the current candidates for the top job do not show any indication that they know how they will tackle public debt which currently stands at 90 percent of GDP, with public spending currently standing at 56 per cent of GDP.
BothΒ front-runners, the Socialist Francois HollandeΒ and Nicolas SarkozyΒ say they will tax the rich 75 per cent, something this is hardly going to encourage entrepreneurship or just as importantly create any confidence in the bond markets, where one ratings agency hasΒ already downgraded France’sΒ AAA status.
So, how will the new President, assuming that it will be Hollande, the polls certainlyΒ think so, approach France’s newΒ debt burden – denial is not an option, nor is playing theΒ anti-immigration card anymore.
A period of austerity with cuts to public spending, will need to beΒ backed with a more flexible tax plan, at a time when France’s oldΒ enemyΒ across the channel hasΒ just cut the top rate to 45 per cent, where does the future President thinkΒ the rich will leave their country for?
None of this will be welcomed politically, which is why it is important that the cuts are managedΒ at a slower pace than they are over here, otherwise France will find that it will bequeathingΒ a future generation with far less than it currently enjoys.