PARIS – As France’s presidential election looms, the country is approaching a breaking point. For three decades, under both the right and the left, the country has pursued the same incompatible, if not contradictory, goals. With the sovereign-debt crisis pushing French banks – and thus the French economy – to the wall, something will have to give, and soon.
When the crunch comes – almost certainly in the year or two following the election – it will cause radical, wrenching change, perhaps even more far-reaching than Charles de Gaulle’s coup d’état, which led to the establishment of the Fifth Republic in 1958.
Most French politicians and bureaucrats call such notions scaremongering. After all, aren’t key indicators like debt ratios or budget-deficit trends worse in the United States and Britain? Indeed, France’s predicament might seem comparable with the “Anglo Saxons,” were it not for the French political class’s beloved baby, the euro.
While the euro has not caused France’s economic problems, its politicians’ commitment to the single currency represents an insurmountable barrier to solving them. The basic problem is that the country’s super-generous welfare state (public spending amounts to about 57% of GDP in 2010, compared to 51% in the United Kingdom and 48% in Germany) stifles the growth needed for the euro to remain viable.