Will President Hollande be able to turn France – and the Euro Area – around?

George Irvin ponders whether newly-elected French President Francois Hollande will be able to turn France around, much less the entire eurozone.

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Will newly-elected French President François Hollande be able to turn France around, much less the entire Euro Area (EA)? Professor George Irvin investigates

At the moment, the EA is stagnating, unemployment is rising and the entire banking system is dangerously fragile – in Nouriel Roubini’s phrase, we are watching a slow motion train wreck. How far genuine change is possible depends essentially on three factors: the reaction of the financial markets; how Hollande manages the new relationship with Germany and, more generally, whether ‘austerity’ is ditched and the EA goes for growth.

How will financial markets react to a socialist government in France? The knee-jerk reaction is to invoke Mitterrand’s experience in 1981-3 when financial turbulence forced the social-democratic left to change course within two years and into ‘cohabitation’ within five.

What is easily forgotten is that Mitterrand’s policy failed largely because inflation rocketed to double figures in 1983, a phenomenon unlikely to be repeated today.

True, Hollande has committed himself to a number of policies which will prove difficult to deliver: Generating growth and reducing unemployment and ‘sanitising’ public finances – significantly reducing the budget deficit over the next five years.

Equally, his rejection of Angela Merkel’s ‘Stability Pact’ – the pact requires a legal commitment to budget balance on the part of signatories – appears to put him on a collision course with Germany.


See also:

Vive Hollande! M. Normal wins the day 8 May 2012


Nevertheless, a number of factors suggest Hollande’s government may succeed. For one thing, it is increasingly obvious that deep expenditure cuts lead back to recession, making unemployment and public indebtedness worse – as we see in Greece, Portugal and Ireland and will soon see in Spain too.

The message is simple: in a recession, fiscal rectitude is achieved through state-led growth – it is higher national income that generates higher savings, not the other way around. Even the IMF appears to agree.

For another, the Treaty is deeply unpopular – and not just in Greece, Portugal and Ireland. In Italy, prime minister Mario Monti has made it clear he thinks it foolish and that jointly-backed eurobonds constitute a better solution; Belgium’s Guy Verhofstatd agrees and even European Commission President Jose Manuel Barroso appears to support this position; while new Spanish prime minister, Mariano Rajoy, has already warned Spain will not meet next year’s fiscal targets.

In demanding the Treaty be changed, Hollande will have the support not just of the EA periphery but of some of its major players and many of its economic experts. One should bear in mind poll indications for Italian Parliamentary elections to be held next spring suggest a centre-left coalition will emerge.

Whether the Germans and their right-wing Dutch and Austrian allies could long hold out against a majority of the larger EA economies is doubtful. Federal elections must be held in Germany before next September; the polls point to the SPD entering power, and the right-wing Free Democrats (FDP) being annihilated.

There is a new twist too. In anticipation of the changed political conjuncture, Hollande and Merkel have finally agreed on the details of a Euro Area transactions tax (a form of ‘Robin Hood’ tax). A 0.01% tax on all financial transactions – approved by European Parliament 10 days ago – would raise €120 billion per annum, providing the financial basis for launching a huge EA infrastructure investment programme.

Merkel knows she needs to avoid market panic if Hollande wins, and further details of the new growth plan can be expected this week. In short, Sunday’s election result is crucial not just for France but for reviving Europe’ economic and political fortunes. Watch this space.


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72 Responses to “Will President Hollande be able to turn France – and the Euro Area – around?”

  1. Foxy52

    The big question: Will President Hollande be able to turn France – and the Euro Area – around?
    http://t.co/0tL4yg01 #BBCqt

  2. Robert Clayton

    The big question: Will President Hollande be able to turn France – and the Euro Area – around?
    http://t.co/0tL4yg01 #BBCqt

  3. Shirley KV Chan

    RT @leftfootfwd: Will President Hollande be able to turn France – and the Euro Area – around? http://t.co/RIKuiA6Z

  4. Anonymous

    No, because it’s still a defined return, of course.

    Thatcher destroyed most of the deacent pension schemes in this country, which were fully funded. And Governments of both sides have refused to make companies pay for them.

    Of course, YOU are proposing removing company’s contribution to pensions entirely.

    And no, being forced to purchase a scheme at a lousy rate is a direct result of casino pensions. Those rates will continue to fall radically as a result of the collapsing economy and QE, of course.

    19K? Let’s see. Someone in an average sales job makes £300 a week. With your forced “saving”, at 5%, that’s £15 a week, or £780 a year. Even assuming 50 years of work, that’s only £39,000 TOTAL.

    And no, 3% return, minus fees) versus inflation which across the last 25 years averages 5.2% a year – losing money. It’s simply about expanding the pool your banker friends get to play with.

    And from that tiny pot you think you can “replace” the state pension – of course, to you 1.2k a year, roughly, IS what people are worth. And, of course, you haven’t mentioned stopping NI (since, of course, that’s not in your plan), so it’s a 5% tax above and beyond the current system.

    That you’re using wikipedia as a source shows how little you actually know about research.

  5. Trakgalvis

    The big question: Will President Hollande be able to turn France – and the Euro Area – around?
    http://t.co/0tL4yg01 #BBCqt

  6. Anonymous

    Of course, YOU are proposing removing company’s contribution to pensions entirely.


    Find a link where I’ve said that. I’ve never said that. What I do think is that company contributions should go into a fund in people’s own name.

    That way horrific things like ASW pension fund are avoided.


    Note, the government set up the rules that people who hadn’t retired could be robbed completely. This is outright theft approved by Labour who set the rules up. The Tories and Lib Dems have carried on with this policy by not changing the rules.

    Now if the money contributed by companies is in your name, in a segregated fund, then it cannot be stolen unless the government takes it.

  7. Anonymous

    On your calculations. Median wage 2011 was 26K.

    So someone who was 65 in 2011, started work in 1964.

    Now using the index of average wages, they would have been on 706 in 1964 if they were on median wages throughout their working life. A plausible enough argument to show the sums of money. In practice they would have been on a lower salary at the start and more at the end. The nature of an ‘average’

    http://www.measuringworth.com/ukearncpi/ has the data.

    Go and check and see if you disagree. Then I’ll lead your though the next part, in detail

    Year Average Wage
    1964 706
    1965 751
    1966 798
    1967 829
    1968 895
    1969 962
    1970 1,080
    1971 1,202
    1972 1,351
    1973 1,539
    1974 1,809
    1975 2,291
    1976 2,651
    1977 2,894
    1978 3,269
    1979 3,775
    1980 4,542
    1981 5,129
    1982 5,613
    1983 6,087
    1984 6,452
    1985 6,997
    1986 7,551
    1987 8,140
    1988 8,853
    1989 9,663
    1990 10,601
    1991 11,417
    1992 12,088
    1993 12,447
    1994 12,900
    1995 13,302
    1996 13,777
    1997 14,367
    1998 15,098
    1999 15,825
    2000 16,545
    2001 17,403
    2002 17,953
    2003 18,525
    2004 19,331
    2005 20,215
    2006 21,164
    2007 22,217
    2008 23,019
    2009 22,975
    2010 24,000
    2011 26,000

  8. Anonymous

    The median wage is a nice sleigh of hand, but is utterly distorted by high-paid individuals who can afford to save enough that the state pension is utterly irrelevant to them.

    Using the poverty line would be a far better measure of the problems you’re trying to inflict on the poor.

  9. Anonymous

    You haven’t said anything on the topic, because of course it’s not part of your plan.

    YOU set up the rules, as a member of the Feral 1%, yes. You’re constantly robbing people. The answer is defined returns, rather than it being dependent on casino banking.

    Thatcher stole those from the nation.

    And of course bankers can lose the cash that even the poorest have been forced to ante up for funding their operations under your plans. Not to mention the fees.

  10. Anonymous


    Median wage isn’t a sleight of hand. If I had used average, then it would be distorting what people mean by the average income.

    The statistical thing about wages is that they tend to conform to a power distribution, an example of which is the Pareto distribution


    The average or mean is much higher than the median, because it is distorted by high earners. So even George Bushes argument that something must be done about the half of the people who are below average is distorted.

    So do you want to carry through with the calculations for the 19K a year, or are you going to post your own numbers as to what you could have got for your NI, if the government hadn’t taxed your contributions (if you think NI is a tax), or given it away (the Ponzi element).

    It’s interesting to work out what you could have got and to see the true price of the government scam.

  11. Anonymous

    Median is of course an average. Your knowledge of statistics is showing. And once again, you’re using wikipedia as a link on serious statistics.

    NO, YOUR calculations are claiming 19k a year. Prove it! It’s completely out of line of even the whackoid Libertarians in America’s claims.

    And your proposal did NOT state in any way that NI was going to be removed. Not to mention the fact you’re proposing stripping every single current pension element.

    The scam is of course yours, attempting to divide actual likely income by over 80%, and backstabbing members of your own caste shows your morality clearly.

  12. Liz K

    Will President Hollande be able to turn France – and the Euro Area – aroun http://t.co/n5P0stDQ by @gwi40 #France #Holland #euro

  13. Anonymous

    Median is of course an average. Your knowledge of statistics is showing. And once again, you’re using wikipedia as a link on serious statistics.


    No, median is not necessarily the same as average or mean. For a normal distribution it is the same. For a Pareto distribution, which is a power distribution, the median is not the same as the average.

    The median wage is the wage where 50% earn less than or equal to that wage.

    The average is the sum of the wages earned divided by the number of wage earners.

    The two are not the same, as a simple example will show.

    Consider 10 people. 9 earn 20K a year, 1 years 220K.

    The median wage is 20K. 5 people earn 20K or less, 5 people earn more.

    The average is (20 * 9 + 220) / 19 = 40K.

    The median is completely different than the average.

    For example, the average wage would go up if Bill Gates came to live in the UK. The median wage is highly likely not to move since other wages wouldn’t be affected.

    Don’t forget, your saying that the 19K figure is wrong. In order to say that its wrong, you must have your own figure. Care to put that up?

    Now, I’ve posted the figures for historical average wages, and the median wage in 2011.

    Do you accept they are correct, or do you have some other figures?

    I’ll lead you step by step through the numbers.

  14. Anonymous

    Hmm, my first reply seems to have vanished into the ether. Let’s try again…

    Mean, Median and Mode are all averages. Your lack of basic mathematical knowledge is all you’re railing against here.

    YOU are proposing “26k”, you need to prove it.

    Moreover, it is of course misleading since you also need to show the spread which will occur; The spread of the state pension is zero for anyone who qualifies, but under your system there can be an extremely large amount of spread.

    As I said, doing figures with earning on the poverty line is far more likely to be accurate, and of course there also needs to be taken into account average unemployment periods, part-time work and the like.

    You also have NOT provided primary figures for any statistics, but ones with no providence. There’s a reason that the ONS exist…

  15. Anonymous

    Mean, Median and Mode are all averages. Your lack of basic mathematical knowledge is all you’re railing against here.


    Far from it.

    Can you have a distribution where the mean, median and mode are different? I can think of several standard distributions where that is the case.

    You are making yourself look like a plonker by claiming otherwise.

    I’ve already posted a counterexample for you to consider.

  16. Anonymous

    I see, you not only don’t understand basic mathematics, but you’re railing against it. Simply because different measures of the average give you different results doesn’t mean they’re not averages!

    No wonder…

  17. Anonymous

    Not at all. I have a tad more knowledge than you might think. Such as a degree in statistics.

    Now back to the difference between mean (or average), mode and median.

    You’ve claimed that the are the same number and can’t be different.

    So lets say we have a population of 5 people with the following incomes.

    12K, 13K, 25K, 50K, and 400K

    What’s the mean (average to most people)?

    What’s the median?

    I’ve picked the numbers to make the maths simple for you.

    Mean is (12+13+25+50+400) / 5 = 100K, Also the average. Distorted from what people would say is Mr Average, because of the high earner.

    Median is 25K.

    Now why do you think that the mean and median should be the same?

  18. Anonymous

    I see, you’re now lying about your qualifications too.

    I don’t give a shit about “simple”, I care about using correctness. And as I said, a good data point to use is the poverty line for the reasons I explained.

    You’re going off on a complete tangent because you know PRECISELY what the ONS data will show when your calculations are applied, and it ain’t favourable to your myths and legends.

  19. Anonymous

    The poverty line uses median, and not average for the reasons I’ve mentioned.

    Still having problems with the difference between median and mean/average or has the simple example shown you why they are different?

    I’m not lying about qualifications either. It’s a particularly strange habit of yours. Quite religious. e.g Anyone who doesn’t believe what Newsbot believes must be heretical scum.

  20. Anonymous

    Yes, you are having problems with the concepts of averages still I see.

    And of course you’re lying, it’s what you do. Someone who can’t even understand averages is not a statistics graduate.

    And yes, I’m sure you are once more putting your sins – considering people heretical scum – onto others. For one thing, the entire Jewish concept of Heurem is very different to the Christian Heretic, and can’t apply to non-Jews at all.

  21. Anonymous

    My religion is Judaism, and it’s your projecting your sins onto me again, since the Jewish concept of Heurem dosn’t extend to non-Jews (and isn’t all that like “heresy” in the first place).

    And yes, you’re still having problems with the concepts of the different averages, which clearly shows you’re lying about a statistics degree – it’s not even a GOOD lie.

    Median is an average, get over it.

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