Is France the real “Greece”?

Opinion article by Alina Bârgăoanu, director of Convorbiri europene

The Euro crisis triggered a tight competition among member states for “The Sick Man of Europe” award (arguably, “competition” might not be the proper term). In fact, this competition goes back in time, leaving the term’s historical resonance aside: in the 70s the contender was Great Britain, in the 90s, right after the reunification, it was Germany. Not surprisingly, at the height of the Euro crisis, Greece was considered for the award, then Italy, Spain, Portugal. During the crisis, the reunified Germany became “eligible” again, this time not for complying with the standard eligibility criterion (e.g. failing in the European and global economic competition), but precisely for the opposite reasons, for being hyper-competitive, thus putting the European construction at risk. At the moment, France seems quite close to being nominated; in fact, prestigious media platforms such as Reuters or Forbes have explicitly portrayed it in such terms.

There are several indicators that could underlie such a severe judgement. My focus will be not only on macroeconomic data, but also on some more colourful examples, which are sometimes more convincing than indicators on competitiveness or industrial production.

For instance, a New York Times editorial wrote that approximately 70% of the ingredients used in the famous French restaurants are processed and frozen. Local bookstores abound in books hailing the downfall of France (hence the term le declinisme); here are a few intriguing titles: “Reinventing France”, “France, a Challenge”, “France – a Peculiar Form of Bankruptcy”. Before the opening of the 68th Cannes festival, the famous French actress Catherine Deneuve expressed her regrets that there are no longer any stars in France.

For the past 20 years, the French industry has lost close to one million jobs, while estimates show that tourism will account for a higher percentage in the French GDP than the industrial production. The economic growth is feeble, almost stagnant, while the Eurozone shows some signs of recovery. At over 10%, unemployment is double the level in Germany, with unemployment among those aged under 25 at a staggering 25%. The exposure of the French banks to the over-indebted South is still significant, while the exposure of their German counterparts has decreased accordingly. The French political class as a whole faces accusations that it was slow in implementing the reforms necessary to make France competitive within the eurozone and at a global level; instead, it merely came up with reformettes, French style.

According to the French government’s own estimates, the deficit will account for 4.4% of GDP, and the public debt for 97.2% of GDP in 2015 and 98% by 2016. These data feed the legitimate question: does France belong to the European North or to its South? Is it at the core of Europe or at its periphery – to use the new jargon created by the Euro crisis?

When asked “Is France is a Northern European powerhouse or a Mediterannean indebted and dependent country?”, President F. Hollande gave an earnest answer: “Yes to both”.

Bases on different economic and social fundamentals (debt, deficit, weak growth, low productivity, rising unemployment), France’s economic philosophy differs much from that of Germany; France’s interest in stimulating the economy à la Keynes, even in the face of the possible risk of inflation, sets it apart from Germany, which continues to play the austerity card, among other things due to its historical fear of inflation.

When looking at things this way, it may be less important whether the tight competition for “The Sick Man of Europe” award will be won by France or by another contender. What is indeed worrying is that some indicators encapsulating France’s economic standing in the EU and in the wider global economy are strikingly “Greek”. Which could give substance to the hypothesis that, to Germany, the real Greece is France.

About the Author

Alina Bârgăoanu

Alina Bârgăoanu, profesor universitar Jean Monnet la SNSPA, decan al Facultăţii de Comunicare şi Relaţii Publice; Președinte al Consiliului de Administrație al Institutului European din România; cele mai recente lucrări: „Why Europe? Narratives and Counter-Narratives of European Integration” (2017, Peter Lang), „United by or Against Euroscepticism. An Assessment of Public Attitudes Towards the EU in the Context of the Crisis (2015, Cambridge Scholars); bursier Fulbright (2001- 2002).