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Thursday 4 December 2008

Interview: Christine Lagarde

A symbol of change – but is she the real thing?

Matthew Lynn meets France's new finance minister, Christine Lagarde.

That the French business community has welcomed her is beyond doubt. In a country where profit-making has been vilified for decades as a conspiracy against the workers, a pro-American businesswoman is seen as a breath of fresh air. ‘Christine Lagarde is key because she has experience outside France, and she has a new way of looking at things,’ said Laurence Parisot, the head of Mouvement des Entreprises de France, the employers’ federation.

Lagarde herself sees her task as putting some fuel back in the French engine. ‘I was absolutely flabbergasted when I came back from the US to see how much people were talking about their holidays and their weekends and how many hours they were going to save towards their special time-credit to add to their seventh week of vacation,’ she says.

The trouble is, when it comes to specifics, she’s less clear on what she wants to do. ‘I want to achieve what Sarkozy wants to achieve,’ she says. ‘I want to achieve his reforms, and give confidence back to the French. The two things I want to concentrate on are employability and competitiveness. The system can’t carry on the way it has done.’

That’s certainly true. The French economy is a mess. Jean-Claude Trichet, the former governor of the Bank of France, now running the European Central Bank, has taken to describing the French state as ‘bankrupt’, and so had the prime minister. The statistics are terrifying. Growth, amid a booming global economy, remains stuck at a dismal 1.3 per cent this year — only half the average even for the low-growth eurozone. France has one of the highest rates of joblessness in the world at more than 8 per cent, and youth unemployment in some areas is more than 25 per cent.

The trade deficit is soaring, a measure of declining competitiveness, particularly against its great rival Germany. The state still consumes more than 50 per cent of GDP, and shows no signs of shrinking. The brightest of the current generation of French graduates have hopped on Eurostar to find work in London: 100,000 of them according to French government figures, and probably more, since there’s no requirement to register.

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