ANALYSIS: French debt is the quintessence of what the EU is about.

French insouciance and German efficiency will never make for a good marriage.

We’ve been in France now since late March, and as always when we get back here, I’m struck by the neat and tidy nature of French infrastructure. Houses, bars and shops owned by the private sector look as shabby as ever, but the white lines on our roads are always newly painted. Speed-bumps have been laid either end of the local village, and all this month the Council has been laying new pavements, dotted every now and then with plant holders. The verges stretching out of town were carefully landscaped last year, and all the lampposts renewed the year before that. On rural roads, every verge is cut once a month.

Every time we drive past another beautifully renovated Mairie, or another newly hedged recycling point, or another pile of free compost provided by the commune, I turn to Jan, smile and say “The French public sector doesn’t stint itself, does it?”

Yesterday, after three months of quietly fuming about a level of public works that disappeared in England around 1964, I finally got round to looking up what all this beautification costs.

France’s general government debt, as defined under the Maastricht Treaty, rose €46.5 billion in the first quarter of this year to €1.54 trillion. Apparently, this reflected a sharp increase in borrowing by the Treasury, although this kind of bollocks seems to me to have been going on for years.

Public debt represents a fraction over 80% of France’s gdp. It’s rising – wait for this – at around 2% per quarter. In May 2010, it was an eye-popping 11% higher than May 2009. As a result of the eurozone recession, there has of course been a sharp deterioration in the country’s public finances. But then, if you just carry on blithely as if nothing had changed, there will be won’t there?

Anyway, rather than face the pain (Sarkozy keeps saying that France is ready for pain – but not just yet) the State has been borrowing like the proverbial condemned man. This year alone there has been a €44 billion rise in state borrowing through the issuance of long-term financial instruments by the French Treasury.

As regular readers will now, France’s finance minister Christine Lagarde can’t divide by four, she can only add up – and so to her, things are looking pretty good. In a statement to the French media Tuesday, she said that the nation’s newly frightening indebtedness “reflects the Government’s efforts to kick-start the economy after the steep slowdown”. Seems to me an economy never got kick-started by employing eight blokes to put in new pavements, but we’ll let that go.

“These measures are starting to bear fruit,” said Lagarde, “GDP has been growing at an average quarterly rate of 0.3% over the past year.” Weeell, it sort of has Christine – but it was 0.1% during the most recent period.

But throw ye not of ashes on your sackcloth, because France’s top money girl added that efforts to reduce the budget deficit and sustain growth “will allow the government to gain control of the debt-to-GDP ratio”. She’s yet to elucidate what those budget-busters and growth thingies are.

I mention all this not to have a go at France (having a go at Christine Lagarde is a bit like pummelling a dwarf) but rather, to point out just how divorced from reality most eurozone countries are, and how France really is – and always has been – the quintessential EU State.

I use the word quintessential in both the favourable and pejorative senses. France has a thriving agriculture and a sound industrial base. It has the cheapest (largely nuclear) electricity and an excellent (but sensible) social welfare system. The public health services are as good as anywhere in the world. Nobody is destitute. Its media haven’t been dumbed-down yet. Communal cooperation is encouraged, and active. And school discipline and standards are the envy of Europe.

But France also reflects the EU’s attitude in every single one of the bad ways too. It sees wealth as there to redistribute and spend. Its farmers remains massively subsidised, wasteful and smug. Its unions are as truculent as ever. Its products are expensive. Its auto industry is also massively subsidised – cleverly, and indirectly. Public sector workers in output industries get a daily lunch allowance. Most shops still close for lunch. Digital wireless internet is impossible to get in many areas.

If the Government does anything the dockers, farmers, workers, truck drivers or postal system don’t like, there are strikes, autoroute blockades, port sieges and all manner of pointed civil disobedience. And above all, whenever any dimension of economic or fiscal reality is introduced into a negotiation, there is a Gallic shrug followed by “The money must be found”.

No, President Sarkozy, France is not ready for pain: it hasn’t been up to the pain thing for a long time, and its main objective going forward seems – to the casual etranger – to never again have to suffer any pain whatsoever. When the pain does finally hit France (as this time it must) France will not be ready for it, and France will resist it as another wicked scheme by l’anglo-saxonisme to do it down.

The row between France and Germany in recent months has deeper roots than most observers understand. But as it happens, by family and travel these are the two countries I know and like best in Europe. Over the last few years, there has been a growing feeling in Germany that Pierre is taking the piss. And over the last few months here in France, there has been a resurgence of those muttering that Heini is trying to run everything, because Heini always wants to run everything. The cheerfully enunciated “We’re all Europeans now!” of a decade ago has gone – perhaps forever.

The eventual bottom line of the eurozone is going to be a battle between two extremes: the German banker, and the French farmer. These folks don’t move in the same circles, and neither circle can be squared. Contrarian or not, my view remains that these two nations founded the Union, they make excellent trading partners, but they aren’t cut out for marriage. And now it’s clear that the Union is no longer working for them, they’re unlikely to stick with it. Fiscal divorce and a close economic relationship is what they need – and what will happen in the end.

5 thoughts on “ANALYSIS: French debt is the quintessence of what the EU is about.

  1. The farmer surrounding my little patch in the Loire Atlantique region seems totally oblivious to anything outside of department 44. Furthermore, he has a history of dumping cow shit on the roads to stop townies coming anywhere near our place. I'm rather in favour of this.God knows what he will do if the local tax office come knocking one day to say the subsidies are to be cut, and he has to contribute more….gotta love the Gallic approach.More tax Monsieur – take another step and I'll ensure you keep going to the sheep dip.

  2. Sorry, but this has to be one of the most caricatural article I have read about Europen economy sorry. There are a lot of things to say about the state of european and French economy but France is not the quintessence of Europe. The private sector is far from being "shabby", what do you think about exactly ?And describing the farmers as "smug" shows a lack of knowedge abot this profession – at least in France.And please don't mock my bad english, I am Italian, living in France,and dont recognize the country in your description, really …

  3. Pingback: EU CRISIS: OSBORNE EUROBOND PLAN SWATTED BY FRANCE & GERMANY | The Slog

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