The history of France has many examples of governments and presidents that have failed to deliver on their promises. The current President of France, Francois Hollande, can safely be recorded in the record holders of unfulfilled promises.
Unrestrained promises caused irritation among the French. This led to the far-right “National Front” Marine Le Pen won a landslide victory in the first round of municipal elections in France.
The first reshuffle in the government is promised on March 31. The season of resignations will most likely be opened by French Prime Minister Jean-Marc Airo. He has already recognized the defeat of the Socialist Party and said that he was ready to bear responsibility.
The failed economic policies of François Hollande and his party led to disappointing consequences for France. All this caused a record decline in Hollande’s rating, which became the lowest in the history of the country.
1. Reduction of social benefits for employers
During the 2012 election race, François Hollande said he would not “lose a minute” and would immediately take on stimulating a weak recovery process. He promised to reduce the high social charges levied on employers. Thus, he intended to ease the pressure on the country’s labor market, thereby allowing employers to expand their staff without fear of rising tax and social pressures.
However, 2 years after Hollande became president of France, the only thing they were offered to reduce the social burden on entrepreneurs was a “social responsibility pact”. According to him, the French business should give an answer to his initiative, take responsibility for creating new jobs.
2. Reducing unemployment
The fight against unemployment was one of the key priorities of the campaign of Francois Hollande. However, since the beginning of his reign, the unemployment rate in France has grown by 6%. Currently, the unemployment rate is 11.1%.
As a result, the French expectations regarding their personal financial situation are quite pessimistic. The IMF predicts that the unemployment rate will rise in 2014 to 11.6% and will not fall below 10.6% during the entire term of Hollande’s reign.
3. Cost reduction
Hollande promised to avoid painful austerity measures in the form in which they were used in neighboring Spain and Italy.
However, as a result of the negative consequences of the debt crisis, France’s public debt and budget deficit exceeded the allowable limits within the European Union, as a result of which Hollande had to cut costs.
In 2015-2017 Francois Hollande plans to reduce government spending by 50 billion euros.
4. Reduction of external debt
During the election race, François Hollande repeatedly criticized his opponents for their desire to cut budget spending, saying that stimulating economic growth is the best way to reduce external debt.
However, it was not possible to reduce external debt either. It is only growing, and at the same time, the cost of its maintenance is growing. The ratio of public debt to French GDP is about 93% of GDP. In monetary terms, this amounts to about 1.9 trillion euros.
In 2014, the level of public debt will rise to a historical record and will amount to 95% of GDP. At the same time, payments on the interest debt of France reached almost 47 billion euros, and this is the main item of budget expenditures.
5. Fiscal pause
In August last year, François Hollande, realizing the growing discontent of the French in connection with growing tax pressure, promised a “fiscal pause”. According to his promises, it was assumed that in 2014 the growth of tax pressure would stop.
However, the proposed draft budget for 2014 indicates the opposite, the French will pay one of the highest taxes in the world. Due to the fact that the public debt in 2015 will reach a record high of 95.1% of GDP, it is planned to prevent its further growth by raising the value added tax to the maximum possible value of 20%. Certain tax breaks will be abolished, for example, children’s benefits, and the VAT rate will increase to 20% from 19.6% for the main and from 7% to 10% for the intermediate.
Of course, politicians are trying to somehow smooth over the situation, providing benefits for enterprises and poor citizens, but this does not solve the problem of excessive workload.
Probably almost all French citizens are unhappy with the tax burden, and the load is really huge. This year, the volume of mandatory contributions will exceed 46% of GDP.
6. Economic growth
Hollande’s election program stated that budget cuts should not harm economic growth. He promised, along with tough measures, to implement a program to stimulate economic growth.
Since Hollande took power in May 2012, growth has been observed only in the last 3 quarters, and the government has had to abandon its goals of reducing the deficit and lowering unemployment by the end of last year.
Unstable growth combined with weak tax revenues to the budget means that Hollande will not be able to reduce the budget deficit to the planned level of 3.6%.
Holland’s reforms were even dissatisfied with the IMF, where they believe that the problem of reducing the budget deficit should be solved by cutting social spending, rather than introducing new taxes, which are “one of the highest by international standards and therefore impede the attraction of investments and job creation” .
Cost reduction policies and weak economic growth, coupled with declining purchasing power, could lead to deflation in 2014.
7. Reduction in regulation
The uncontrolled growth of various regulations and standards exerts extremely negative pressure on the French business, primarily in the construction sector. Hollande during the pre-election race announced his intention to reduce “the volume of regulation”, but in the first year of his presidency did not take any specific measures.
As a result, 2013 became one of the most difficult for the construction sector. According to preliminary data, the number of new houses built in 2013 barely exceeds 330 thousand units, which is the lowest level in 10 years. According to government forecasts, the number of houses was to be 500 thousand.