Many
Europeans are breathing more easily this morning as we consider the encouraging
results of the Dutch elections. With a slackening wind from the North Sea holding
up, one hopes for good, the progression of the populist ship, it seems a good
opportunity to look more closely at Marine Le Pen’s economic programme and hope
that its lunacy will become increasingly apparent to electors in France.
The most
complete exposition of this programme I have read so far can be found in an
interview published in “Investir, Le
Journal des Finances” on February 18 of this year. While M.L-P’s positions
on the single currency and the EU itself have been well rehearsed, what caught
my eye in particular was a comment tucked away in the middle of the piece where
she says: “ … the whole logic our of policy is to no longer depend on
foreign creditors.” [1]
A statement
that is eerily familiar to those who remember François Hollande’s Le Bourget
speech in the run up to the presidential election in 2011: “My enemy is finance.”
It is worthwhile
repeating the facts about France’s indebtedness, as reported by Le Monde a few days ago, although M.L-P
clearly prefers facts of the alternative variety. Current debt runs to 97.5% of
GDP, 60% of which is held by foreigners, or, as the statisticians would describe
them, “non-resident investors”. Annual interest payments, amount to €40billion
(yes billion!!).
The only
way of “no longer depending on foreign
creditors” would be to default on most of that debt, which M.L-P says she would
stop short of. But investors worried about the prospect of France ditching the
euro and having their debt repaid in a devalued currency are hedging their bets,
which goes some way to explaining the rise of French 10 year rates over the
last few months and the increasing spread with comparable German rates.
Whatever
the bluster from M.L-P, it is very clear that any programme to reduce dependence
on foreign creditors will require the implementation of a patient, credible and
single-minded policy over many years. To claim anything else is pure fantasy.
Unless of
course the Euro is abandoned and the EU falls apart. What would happen then is
anybody’s guess.
François
Fillon, for all his faults, is the only candidate who seems to have a proper
understanding of this challenge. Whether he will be elected President and in a
position do something about it is very much a matter of conjecture at the
moment. But one hopes that he will at least, in the upcoming televised debates,
explode the myths surrounding the lunatic policies of one of his main rivals.
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