Courcy’s Intelligence Brief

The left in France has long been dismissive of the UK, and in particular of the UK’s euro-scepticism, but there are signs that the UK’s faster recovery from the global financial and economic crisis that began in 2008 is beginning to attract some jealous attention.  On 17 November, in little noticed remarks made while speaking to the media about his new book ‘The Battle of Made in France’, France’s Industry Minister Arnaud Montebourg praised the policies of the Bank of England and clearly indicated his preference for these policies over those of the European Central Bank.  The point he didn’t make, but didn’t need to, is that France cannot follow such policies itself because it has surrendered control of monetary policy to the ‘one-size-fits-all’ remit of the European Central Bank.

Speaking about Britain’s policy of combining budgetary cuts with quantitative easing, Montebourg said: “It’s not entirely a policy of austerity.  It’s a tough policy in budgetary terms and that is what we need in Europe.  We are, ourselves, in favour of budgetary seriousness.  Paying our debts is the normal thing to do.  On the other hand, we need a European Central Bank that follows the example of the Bank of England, which, as I recall, makes out cheques for billions of pounds to Mr Osborne [Britain’s Chancellor of the Exchequer].”

This comment deserved more attention than it received for three reasons.  The first, of course, is because any wobbling in commitment from France towards the euro-project would be far more serious than happenings in Greece, or even Italy.  The second is because Montebourg’s remarks reflect a growing panic in Paris and cannot be dismissed as isolated and unimportant.  The latest example of the Hollande administration’s panic is its move to overhaul France’s tax system in response to an ecotax revolt in Brittany which could yet turn into a nationwide tax rebellion.

The third reason is the spectre of a surge of support for the extreme right in the May 2014 European elections following the announcement last week of a new alliance between the Netherlands’ Party for Freedom, led by Geert Wilders, and France’s National Front (NF) led by Marine Le Pen.  The NF took 18% of the vote in the election that elected Hollande in 2012.

Other extreme-right parties have been growing in popularity, with the neo-Nazi Golden Dawn receiving 7% of the vote in the 2012 Greek election and the Austrian Freedom Party gaining 20% in 2013.  In addition to the extreme right, more mainstream anti-EU parties such as the UK Independence Party (UKIP) are likely to poll well in May 2014.  The True Finns party won 19% of the votes in Finland’s 2011 general election.

Immigration is a key factor, as is general disillusionment with the European political elite and of course economic frustration.  The problem for the Hollande administration, as suggested by Montebourg, is that too many of the key policy levers are now out of its reach.  The crisis for the Hollande administration could become a crisis for Europe.