Unemployment is crucifyingly high. Factories have lost competitiveness. The share of euro-zone exports is in relentless decline. Industrial production is still lower than it was in 2008. The euro might have been a French idea – but France has turned into one of its main victims.
The National Front Leader Marine Le Pen is certainly right to insist that France can’t recover while it is inside the single currency. There is a problem however. Her plan for getting out is completely deranged.
The first round of voting in the Presidential election is only three months away, and the National Front leader seems almost certain to make the second round. So in the last week, Le Pen, and her economic adviser Bernard Monot, have started to flesh out details of how France will leave the euro.
How’s that going to work? In the first instance, she will ask the rest of the zone to replace the euro with a basket of national currencies. If they don’t agree to that, apparently the franc will be re-launched, but the exchange rate will be ‘managed’. Meanwhile the state will take control of the Bank of France. It will print money to repay its debtors, and pay for increased welfare and an industrial strategy. Le Pen’s plan is crazy. Seemingly inspired by 1970’s Latin America, it is a kind of Argentina on steroids.
First, there is no point in trying to go back to a basket of linked currencies. That would simply recreate the old Exchange Rate Mechanism, which Britain crashed out of so spectacularly in 1992. It wasn’t just us that struggled within it, however. The whole of Europe struggled to maintain the ERM.