France’s Blairite prime minister holds the EU balance

Jonathan Lindsell, 7 October 2014

Without holding an election, France has what amounts to a new government. It retains President François Hollande, his popularity down to 13%, and Prime Minister Manuel Valls, both from the Socialist Party. Valls was only installed in March but has already survived a major crisis and now leads a cabinet that may bring lasting change to France, and so to Europe.

France’s economy is stagnating and unemployment remains at a stubborn 10%. The previous government under Jean-Marc Ayrault advanced progressive measures, cutting ministerial salaries by 30% and subsidising 16-25 employment schemes. However Ayrault also decreased some professions’ pension age from 62 to 60 and offered free health insurance to an additional half million. The centre-right, led by the Union for a Popular Movement, trounced the Socialists in the March municipal elections, while Front National won May’s EU elections with 24.9% of the vote.

Last month Valls faced a crisis in his cabinet. His economy minister Arnaud Montebourg was a maverick on the left of his party who issued a decree, ‘décret Alstom’, effectively empowering the French government to veto foreign takeovers of energy, water, transport, telecoms or public health assets. The message to the global business community was that France opposes laissez-faire capitalism. Montebourg also opposed German-driven austerity and said of British Euroscepticism:

‘If they were to vote to leave the EU, France will roll out the red carpet to British investors who will flee their country. They will all come to France because companies need Europe.’

Sacking Montebourg and driving out other left wingers such as Cécile Duflot (Greens) allowed Valls to craft a new centrist plan – he describes himself as ‘Blairiste’ and ‘Clintonien’.  He supports immigration quotas and demonstrated a firm stance on asylum policy, both of which have already won him greater popularity than Hollande. He also follows the Sarkozy-era plan for pensions contributions (which would deny most migrants a full pension) and has been one of controversial performer Dieudonné‘s strongest critics.

Valls is also changing the French left on the economy. He told a recent meeting of French employers that “I love business”, a phrase that seems innocuous but was taken as a betrayal by older colleagues.  Simply put, Valls thinks France must be efficient in making money before he can tax and spend it. That is a near-explicit critique of Hollande’s 75% top tax band, high public spending and anti-business rules.

Given his olive branch Downing Street visit yesterday, Valls might be the man to move France to sympathise with Britain on the EU. He’s already fighting red tape in construction and employment, plus cutting welfare spending, but needs David Cameron’s support to temporarily break Brussels’ deficit rules. He’s earned praise from French bankers and, by relaxing tax next year, might attract London’s rich French residents home. He did, of course, implore Cameron not to leave the EU as part of his pro-business narrative. However, to fight off the Front National and the centre-right Valls is the most likely French supporter of EU reform Cameron could hope for.