Moody’s: France’s elections mark a change but no renewal

France’s forthcoming presidential election may well mark a key change for French society, but is unlikely to alter the country’s long-standing resistance to reforms by bringing about a renewal of the economic policy debate, says Moody’s Investors Service in a new report as part of its new “International Policy Perspectives” series.

The report, entitled “French Presidential Elections: A Slow Entry into the 21st Century”, presents Moody’s perspective on why it is difficult to implement reforms in France.

“The fact that one leading presidential candidate is a woman is a symbolic illustration of the change that the elections will bring to French society, but should not mask bigger political trends,” says Pierre Cailleteau, Chief International Policy Analyst at Moody’s and author of the report.

A passage of generations is under way — none of the contenders are associated with what used to be the main equity in French politics over the past 60 years, namely the French war-time resistance movement and “Liberation” — and ideological frontiers are increasingly blurred, adds Cailleteau.
However, Moody’s does not believe that these changes are producing a real “Aggiornamento”or renewal of the economic policy debate. The reason, as identified by Moodys report, is that France remains torn between the rhetoric of reform and a profound propensity towards social conservatism.

Reforming is difficult in France for two main reasons. Firstly, given the degree of prosperity already achieved by France, the “easy” reforms have already been made, and any reform agenda is perceived at best to be a zero-sum game where some — the most influential — will lose out while others will be better off. Secondly, a deep ideological fragmentation leaves a large part of the population effectively outside organised political bargaining. “Resistance to reform, accentuated by a deep ideological fragmentation, generally makes interventionist proclamations a safe electoral bet,” explains Cailleteau.
Also, Moody’s notes that the ongoing election campaigns are barely addressing key themes, with Europe being treated as a secondary topic as are the current momentous changes in the economic geography of the world.

Moreover, a structured discussion on how to raise the growth potential of an ageing society has still not taken place, and a sober assessment of the benefits of years of accumulated debt on the country has yet to be made. Cailleteau regards this as evidence of France‘s occasional disinclination to confront issues of “modernity”.

Overall, Moody’s report says that major changes to the French economy — towards inclusiveness and dynamism — are unlikely in the near term.

Instead, Moody’s believes that France will continue to proceed at its own pace.

“France can afford the luxury of gradualism in reform, but a failure to raise economic potential will, in the context of an erosion of the tax base and an ageing population, severely test the recent pronouncements on fiscal rectitude,” concludes Cailleteau.