Confidence vote won, absolute majority lost: not the best start for the new French government

The new French government, led by Prime Minister Manuel Valls, yesterday won its first vote of confidence in the National Assembly. That was expected, but the big news is that Valls and his government have fallen well short of winning an absolute majority.

269 MPs voted in favour, 244 against, and 53 abstained. The absolute majority is set at 289 votes.

Most importantly, the voting records reveal that 31 MPs from the Prime Minister's Socialist Party chose to abstain. Back in April, when Valls sought the confidence for his first government, he got 306 votes in favour. Hence, yesterday marked a substantial step backwards.

The outcome of the confidence vote seems to confirm that the 'left wing' of the French Socialist Party remains opposed to the economic policies being pursued by Valls - which in substance means remaining critical of the approach defended by the European Commission, Germany and other northern eurozone countries.

Incidentally, these divergences forced a cabinet reshuffle at the end of August - which saw the ousting of the three most left-leaning ministers, notably including Economy Minister Arnaud Montebourg.

French history shows that it is possible to govern without an absolute majority in parliament. Another Socialist Prime Minister, Michel Rocard (widely seen as one of the political mentors of Valls), did it between 1988 and 1991.

However, it remains to be seen to what extent Valls will be able to push through the wide-reaching reforms and sizeable spending cuts demanded by the EU if he fails to win back the full support of his own party. As an alternative, he may try and strike deals with the smaller centrist parties in parliament - but the success of such a move would be far from guaranteed.

Indeed, this is hardly great news at a time when the French economic situation is not encouraging, making it essential to move forward quickly with the necessary measures.
 
The road to recovery may have just become longer and bumpier for France.

Handelsblatt: France is the new sick man of Europe

The front page of Germany financial daily Handelsblatt today depicts France as the sick man of Europe, warning that "a once proud nation faces economic decline." Of course warnings of French decline have been made before - notably the famous ticking baguette bomb on the front page of the Economist a couple of years ago - but it is striking that the German press is increasingly reflecting these concerns.

The front page trails a detailed eight page feature which the paper introduces by arguing that:

"Our most important neighbour is mired in crisis. France risks falling behind when it comes to its budget, its labour market and its industry. However, the country could be successful if only it stops making itself smaller."

The timing might be slightly ironic given that the French economy 'outperformed' the German economy in the last quarter - albeit by staying flat as Germany contracted by 0.2%. Handelsblatt has itself warned that Germany was "no longer a champion" but the German economy is still pretty robust, and should bounce back quickly, while France's problems are much more deeply entrenched.

Le (premier) flic, c'est chic: Hollande picks Manuel Valls as new Prime Minister

As expected, François Hollande yesterday named Interior Minister Manuel Valls, France's 'top cop' (premier flic, hence the title of this blog), as new Prime Minister. The composition of the new cabinet is expected to be announced tomorrow.

For the moment, we know that the two ministers from the Green Party, Cécile Duflot and Pascal Canfin, are not interested in taking part in the new government. They explained in a communiqué that "the ideas supported by the new Prime Minister [Valls] for several years...do not constitute an appropriate response to the problems of the French". We also know that Finance Minister Pierre Moscovici is not in Athens for today's Eurogroup meeting - probably a sign that he is not going to be confirmed either.

It is fair to describe Manuel Valls as an 'atypical' French Socialist - and not just because of his firmness in dealing with certain crime and migration-related issues. The Barcelona-born new Prime Minister has upset quite a few fellow party members in the past. For example, Valls has come out in favour of scrapping France's 35-hour working week and raising retirement age to 65. 

He voted 'No' in an internal Socialist Party referendum on the European Constitution in December 2004 - but then aligned himself with the rest of the party and campaigned for a 'Yes' vote. He even suggested that the name 'Socialist Party' was "dated" and had to be changed. Perhaps not surprisingly, Valls only won 5.6% of votes when Socialist Party members picked their Presidential candidate in October 2011.

In other words, the choice of Manuel Valls as new Prime Minister could be seen as a sign of Hollande's renewed willingness to go ahead with at least some of the supply-side reforms recommended by the European Commission to put the French economy back on track. However, the road ahead for the new French cabinet looks far from easy, for at least two reasons:

• The reaction of the aile gauche (left wing) of the Socialist Party to the appointment of Manuel Valls has been cautious, to say the least. Rebellions in parliament on future economic reforms cannot be ruled out.
• The Socialist Party's majority in the Assemblée Nationale (the lower house of the French parliament) has been shrinking following a number of by-elections, and will be down to only one seat - 290 of a total 577 - once outgoing minister Cécile Duflot of the Green Party claims her seat back. This risks making it more complicated for the new government to pass meaningful economic reforms - although Valls could try and muster case-by-case alliances with some of the smaller centrist parties.   

The first test for Valls and his cabinet will be to push through the so-called 'responsibility pact' - a plan to cut taxes on businesses in return for more hiring announced by Hollande in his New Year's address, and the details of which are due to be unveiled later this month.

We will be monitoring the situation in France closely. For now, one last interesting fact for football geeks (of which there are a few in the Open Europe office): Catalan composer Manuel Valls i Gorina, a cousin of the new French Prime Minister's father, is the author of the official anthem of FC Barcelona. And no, this is not an April's Fool day hoax.

Dieu save the baguette!

Many of you have probably already seen it, but this is the (quite clever) front cover the Economist has chosen to present its special report on France:

You decide what annoyed the French government the most:

a) 'Les Anglo-Saxons' making fun of France's economic grandeur with their unpleasant sense of humour;
b) The irreverent picture of a bunch of France's beloved baguettes about to explode;
c) The content of the report.

One thing is certain: the Economist has hardly made any new friends in Paris. Here are some reactions from the French government:

French Prime Minister Jean-Marc Ayrault (from Berlin yesterday)

"I can tell you that France is not at all impressed by the excess aimed at selling [more] copies."

French Industry Minister Arnaud Montebourg (on French radio Europe 1 this morning)

"Honestly, the Economist has never distinguished itself by its sense of self-restraint. It's the Charlie Hebdo [a well-known French satirical weekly] of the City."

Najat Vallaut-Belkacem (French Women's Rights Minister and government spokeswoman)

"[The Economist] should update its software...We borrow money at historically low rates, not to say negative. We have gained this credibility, and it is acknowledged by the markets."

We expect more reactions to come - and we may also elaborate a bit more on the future of the French economy in the eurozone at some point. For the moment, though, the idea that France should start to be looked at as a potential reason for concern does not sound completely far-fetched.