He's big on promises, but the President is no French revolutionary

As Nicolas Sarkozy arrives in London for a summit with Gordon Brown, what has he really achieved as an economic reformer? John Lichfield reports from Paris
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The Independent Online

When it comes to politics, even the right-wing French politician drives on the left.

This week, President Nicolas Sarkozy will be in London on a state visit. He is a centre-right politician who is more right-wing than his centre-right predecessor. He is generally reckoned to have pushed French economic policy to the right.

Amid the state flummery of official visits, the British Prime Minister, Gordon Brown, will host a summit on trade, the threat of recession, exchange rates and EU farm policy reform. Brown is a centre-left politician who is more left-wing than his centre-left predecessor. He is generally reckoned to have shoved British economic policy to the left.

And yet, on a string of simple ideological tests – trade policy, public spending, government interventionism, state subsidies, exchange rate policy, even taxation – the right-wing M Sarkozy stands to the left of the left-wing Mr Brown.

All might seem set for a disagreeable Sarko-Brown summit. In fact, the two men get on surprisingly well. At the EU summit in Brussels 10 days ago, the pair worked in tandem on several issues (although not all). The summit tensions were Franco-German or Anglo-German.

The odd couple have much to discuss on Thursday. The recessionary transatlantic gale threatens to drive all their plans and long-cherished political ambitions on to the rocks. Both have seen their early popularity collapse. Brown is accused of taking too few decisions too slowly. Sarkozy is accused of taking too many decisions too fast – to little effect.

We have heard much in the past 10 months of Sarko, the jilted husband and triumphant lover. But what of President Sarkozy, the economic reformer? What of the President Sarkozy who promised to make France work harder but earn more? What of the President Sarkozy who pledged to seek out growth with his "teeth"?

Right-wing commentators, in Britain and the US, were quick to seize on Sarkozy as a kind of Gallic Thatcher or Reagan. They have, belatedly, realised that "Sarkonomics" is – to Anglo-Saxon prejudices – a very strange ideological animal.

At home, Sarkozy is a liberal reformer, who promises to create a hard-working, enterprise culture. His reforms have amounted to little so far. He took on the trade unions and won an important battle over pension reform. He has pushed through changes in universities and employment contracts, and the 35-hour week. But these have been incremental reforms, barely accelerating the pace of change begun by Jacques Chirac.

Sarkozy has also cut taxes and let the state budget deficit rip (but so did Reagan). His gut instincts are often interventionist, mostly, one suspects, because he sees himself as a man of action. He has a dread of having to admit that politicians are sometimes unable to control events.

In January, he flirted with a new approach to economic policy, which would dethrone wealth and GDP as the tests of political success and human happiness. Little has been heard since of the "politics of civilisation".

In trade and European policy, he is much closer to traditional, French colbertisme, or state dirigisme, than Brown's unsocialist, post-Thatcher belief that markets almost always know best. Sarkozy favours political control of the European Central Bank and, implicitly, the euro exchange rate.

There will be a joint declaration on the financial crisis after the Brown-Sarkozy meeting. The European Central Bank is meeting on the same day. We can expect a hybrid of Brown- and Sarkospeak, simultaneously pushing for calm and confidence (Brown) and panic and radical action on the soaraway exchange rate of the euro (Sarko).

Sarkozy will assume the presidency of the EU in July. He originally promised to accelerate the reform of the Common Agricultural Policy, even suggesting that farmers should learn to live without subsidies.

More recently, however, he has spoken of "refounding" the CAP, rather than reforming it. According to French officials, "refounding" means preserving the level of subsidies but shifting payments from the larger farmers, already benefiting from the boom in cereal prices, to smaller, more traditional producers. This would be a radical shift in previous policy and makes some sense, environmentally and socially. It is unlikely to go down well with Gordon Brown.

Sarkozy and his Prime Minister, François Fillon, promise that the pace of economic reform will accelerate this year, despite the threat of calamitous results for the centre-right in local elections next weekend. In particular, they promise to build on an employer-union deal to create a French version of "flexisecurity", the Scandinavian social model that makes it easy for employers to fire people in return for generous social protection and training.

A more critical decision awaits on how to reduce the heavy payroll burden of the French social welfare system. Social charges on French employees can be double those in other large EU countries. A report presented to Sarkozy in January recommended that some of this burden should be shifted to VAT. Is the President prepared to bite that bullet – in a time of recession?

Other, recent French leaders have lost popularity by trying to change the status quo – even if that was what they were elected to do. Sarkozy has, carelessly, lost his popularity without changing very much.

His dramatic slide in the polls since January is not a rejection of Sarko's "ultra-liberal" agenda, but is due to an unfortunate collision between his showbiz lifestyle and the erosion of purchasing power and living standards for ordinary French people. His room for manoeuvre is limited by the threat of recession and by the large budget deficit, which already breaches France's euroland commitments.

Sarkozy has two choices. He can hunker down, Chirac-like, and do very little. Or he can conclude that, since he is already unpopular, he might as well push ahead with a radical reform agenda. The evidence suggests he will do the first while proclaiming loudly that he is doing the second.

Old enemies who became good friends

Trade: France is the UK's third largest export market. They take £20bn of our produce each year (10 per cent of the total). Our biggest sales to them are oil (about £1bn) and pharmaceuticals (£700m).

France is the third largest exporter to the British market. We are France's fourth largest customer. They sell us about £21bn of their produce each year. Their biggest sales to us are cars and car parts (£1.7bn) and beverages (£500m), mostly wine.

Investment: At the end of 2005, Britain was the single biggest foreign investor in France, with €85.5bn (£65bn), or 16 per cent of the total of overseas investment in the country. France was the third largest foreign investor in the UK, with £54.1bn (11.2 per cent).

High-profile French investors in Britain include Veolia (which owns water companies) and EDF (owner of electricity companies, including the former London Energy).

High-profile British investors in France include Unilever, BP and Barclays.

People swap: There are an estimated 300,000 French people living in Britain, mostly young, mostly in London and the South-east.

There are an estimated 250,000 Britons in France, mostly retired or middle aged, mostly in rural areas.

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