WORLD being described as a president who would lead a normal life-he used to go to work by scooter. People call him as Mr Normal who understands the cultural sensibilities of French society whereas Sarkozy continued to live a lavish life in spite of people's suffering amidst economic recession. Hollande has also promised to cut presidential and ministerial salaries by 30 percent as his first act. His other election promises include creating 150,000 new jobs, withdrawing troops from Afghanistan by the year-end and reduce the share of nuclear power by 50 percent by 2025. It may be noted, France depends heavily on nuclear power, to the extent of 78 percent. The economic meaning of retracing from nuclear power is to find $444 billion to install that much generation capacity. Not an easy task for France. Many wonder how Hollande would spur growth and increase welfare expenditure! His remedy is to tax the rich even more! He has declared to increase the marginal rate of income tax to 75 percent from the current 41 percent. Anybody having income more than a million euro would be taxed at this rate. Leftists wanted even higher tax rate, perhaps 90 percent if not hundred percent!
France lost its AAA rating France economically is in bad shape like many other European countries. It has lost its AAA rating and may find it difficult to get the necessary loan to keep its economy running if Hollande implements his poll promises. Fiscal deficit is already 5.2 percent and public debt is 90 percent of the GDP. France is already paying out around 2.5 per cent of GDP in interest payments, even though the interest rates are at record low level currently. Hollande has articulated that measures to spur growth can be more fruitful for the sagging French economy than pursuing austerity. It may be recalled that in 2002 France had dropped its currency Frank in favour of Euro. Since then the monetary policies for France are decided by the European Central Bank. That was the reason the Sarkozy govern-
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| LOKAYAT JUNE, 2012
Liberalism on the decline in the liberal France hough voters of France have given their mandate in favour of socialists after keeping them out of power for 17 years, the worrying trend in France is that voters have also extended support to the ultra-right political parThe ultra-right leader ty of Le Pen. Not only the poor, uneducated and unemployed Le Pen has emerged as third most powerful people rallied round this fire spewing ultra-right telegenic political force in lady, but large number of the educated middle class, owners France. Her National Front got 18.76 perof small business and even employees of large corporations cent votes in the first have also approved her anti-immigrant and anti-EU approach. round. She got no Irony is that the ultra-rightists have masqueraded their antichance to seek votes in the second round Muslim, anti-immigrant and anti-Euro Zone stance under the as only top two vote slogans of human rights, secularism and gender equality. Le catchers are allowed to participate in the Pen calls herself a 'feminist' and has the highest following in second round. the age group of 18-24. The rise of ultra-right sentiments has undoubtedly been facilitated by the severe economic crisis, which invited harsh austerity measures and created skyrocketing unemployment.
T
ment had to resort to austerity measures and budget-cuts in welfare schemes.
Election-promises may be shelved
New President Francois Hollande may be compelled to leave out many of his election promises at a time when the country is through a tough period and he understands the cultural sensibilities of the society better.
Whatever his commitment, the new president will have to play a cautious game while pursuing his agenda of growth. The pitfall in his plans is that he has made an optimistic projection of 1.7 per cent growth next year, and 2.5 per cent after 2013. Seeing the growth rate of the last 20 years which is just 1.6 percent, Hollande's assumption seems too optimistic. Most economists believe France will grow by only 0.9 percent. Hollande is a novice, never had any post in the government, but observers hope he would show maturity and may shelve a few of his election-promises for the better times, but then there is immense pressure on him from the other two leftist parties which supported him in the second round to make his win possible. Since he needs majority in the National Assembly also, the elections for which would be held in June, he would not change any of his rhetoric just now. But he may proceed cautiously once he reaches the bridge to cross the sea of challenges ahead.