Nicolas Sarkozy has served up his second austerity budget in as many months, in a bid to
retain France’s AAA credit rating. The president wants to cling on to those three precious letters at all costs. There are elections in six months’ time and he isn’t doing well in the polls.
Austerité Part Deux consists of tax increases and spending cuts totalling €7 billion, the government announced today. There will be increases in VAT and levies on large corporations, as well as curbs on increases in welfare spending. This savings programme follows the €11 billion one announced in August.
Sarko’s bid to get re-elected in 2012 is in disarray. According to the FT, the Greek referendum crisis upset the French president’s plan to use a successful euro rescue package as a platform for his electoral campaign. One could argue that the rescue plan would never have worked anyway, but evidently Sarkozy feels differently.
Recent polls suggest that Sarko would be trounced in a presidential election by François Hollande, the socialist candidate who’s so bland he’s beautiful to a French electorate tired of Sarkozy’s high-octane style. Then there’s far-right candidate Marine Le Pen, whose political charisma has brought about something of a rebirth in the Front National – a phenomenon Janine Di Giovanni wrote about in The Spectator in March. Le Pen may also stand to gain if France feels its amour propre is hurt by an AAA loss.
Sarkozy is calculating that the French are prepared to accept further belt-tightening in order to retain the nation’s credit standing and keep borrowing costs low. He has even pointed out that France should be more like that model of frugality, Germany.
Obviously, he’s forgotten France’s other budget-cutting neighbour – Britain. But then we all know that the French president, as he sneered last week, considers Britain to be “just an island”.
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