Summary
French business and equities would take a plunge if Ms. Royal were elected President in April next.
Ms. Royal’s personal economic views are statist & interventionist; if elected she would have to govern with an alliance of unreconstructed Socialists and Communists.
Far from reforming products, services and labor markets, a Royal administration would most probably impose extra burdens on companies and entrepreneurship.
Analysis
French business and equities would take a plunge if Ms. Royal were elected President in April next.
Ms. Royal’s personal economic views are statist & interventionist; she has little understanding of the importance of profitable and dynamic companies for a country to be prosperous. Worse, if elected she would have to govern with a National Assembly most probably dominated by a largely unreconstructed, backward- and inward-looking alliance of Socialists and Communists.
The risk is not so much a repeat of widespread nationalizations as decreed by Francois Mitterrand twenty-five years ago, but rather the pursuance of ‘social engineering’ measures, in the mould of the ‘thirty-five hours of labor‘ week legislated by a socialist government barely a decade ago.
Little would be done to liberalize products, services and labor markets, to trim public debt and budget deficits, to simplify tax and commercial law; on the contrary, Ms. Royal’s electoral platform contains a long list of proposals that amount to extra burdens on companies and entrepreneurship.
The FT is probably right to suggest that after a couple of years, realities would reassert themselves, Socialists would come to their economic senses and things would start picking up again. But in the meantime, much havoc would have been wrecked on France and French business.
