France now Europe's tiger economy

EVERYTHING IN Lionel Jospin's socialist garden is rosy - or seems to be.

Politics resumed in Paris this week after the long summer break with the news that the French economy is booming, unemployment is melting and taxes are falling.

Mr Jospin, the Prime Minister, has even promised "full employment" - a phrase long banned from the French political lexicon - within a decade. His officials, and the left- leaning parts of the French press, have also taken pleasure in posting the score in the undeclared ping-pong match between Jospinism and Blairism for the loudest bragging rights on the European centre left. The joint Tony Blair and Gerhard Schroder attack in June on the "rigidities" of traditional European economic policies still wrankles in Paris.

In go-ahead, deregulated, New Labour Britain, growth in the first 18 months of Mr Blair's rule was 2.7 per cent. In ante-diluvian, over-regulated, "Old Labour" France, growth in the same period was 4.7 per cent.

France is now creating jobs faster than any other large, developed country in the world, save the United States - 750,000 new jobs in the past two years. Although unemployment remains high (11.2 per cent), the figure has fallen almost every month since Mr Jospin came to power. It could come down to 7.5 per cent in five years on present trends, according to a recent, official study. Tax revenues are so buoyant that Mr Jospin was able to announce a pounds 3.8bn cut in taxes last week, mostly in reduced VAT.

The blizzard of positive figures suggests that the Jospin government will enjoy the smoothest September rentree of any French government for years. But life in the fragmented world of French politics is rarely so simple. Mr Jospin's personal popularity is high but his socialist-Communist- Green coalition is less stable than it has ever been.

The Greens, emboldened by their success in the European elections, have been trying to throw their increased weight around. They want an extra seat in the cabinet. They want Jospin to abandon France's dependence on nuclear energy, when a new generation of power stations becomes due early in the new century. They want a proportional system of voting in parliamentary elections, which would cement their position as the new second power on the French left, displacing the Communists.

On the nuclear issue, in particular, they have warned, they would be ready to quit the coalition. The Prime Minister has stood, mainly, firm. He ruled out a greener cabinet; he has ruled out returning to a PR list system in national elections. He has, however, given a vague promise of a referendum, or at least a "vigorous national debate", before any decision is taken to build power stations.

What is unclear is whether this will be enough to head off a terminal split in his coalition but the good economic news should buy him some time.

After two decades of economic gloom, what has gone right? And how much credit can Mr Jospin, his finance minister, Dominique Strauss-Kahn, and the employment minister, Martine Aubry, take for the success?

Ms Aubry claimed this week the rapid fall in unemployment should be attributed in part to her interventionist policies - a job-creation scheme for young people and the reduction of standard working hours from 39 hours a week to 35. The youth scheme (186,000 jobs created) has been a success, although few of the jobs seem likely to become permanent. The 35-hour week remains savagely controversial. The government says it has created 118,000 jobs already but this is disputed by employers and unions.

However, nearly all of the new jobs created - mostly in new technologies - can be explained in other ways. The approach path to the single currency was painful, forcing France to dampen demand and maintain cripplingly high interest rates. Now the single currency is in place, France is benefiting from a virtuous cycle of low interest rates, low inflation and delayed domestic and foreign investment. Similar to President Bill Clinton in the United States, Mr Jospin inherited a recovery already on the way. His main claim to credit is that he has pursued a centrist mixture of policies - keeping down taxes, boosting internal demand, abandoning his original anti-EMU stand - which have helped the recovery, rather than impeded it.

In practice, the differences between Jospinism and Blairism are not so great as both sets of propaganda like to pretend.

Government economists point also to an unexpected bonus. Until a couple of years ago, the view was that France could reduce unemployment only if its economy grew at a rate of 2.6 per cent a year. Now the French economy appears to be creating "net" jobs once growth reaches 2 per cent. The explanation seems to be that France is changing, almost unknown to itself.

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Jamie and Emily Pharro discovering their friend's prank
video
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Life and Style
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Senior Project Manager

£60000 - £90000 per annum + Bonus: Harrington Starr: Global leading Energy Tra...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Oil & Energy Business Anaylst

£45000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Harrington Sta...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment