Tuesday 21 November 2017

Klaus F. Zimmermann: Ireland may be turning the corner, but would a Hollande-led France drive Europe off course?

THE labour market reform packages recently announced in Italy and Spain were long overdue, but they are setting these countries onto the right track for a more prosperous future. Ireland is also making a lot of the right moves. All of that is to be welcomed as a net plus for all of Europe. Against that backdrop, it is all the more regrettable that France, under a presumable President Hollande, would move in the opposite direction. It would seek to reverse the already timid reforms which Nicolas Sarkozy managed to put through during his term.

If the Socialist Party's candidate for the French Presidency is indeed elected and follows through on his announcements, he risks his country being viewed rather quickly as assuming the mantle of the pre-Mario Monti Italy. Yes, Monsieur Hollande has paid lip service to former German Chancellor Gerhard Schroeder's labor market reforms, which the latter launched well over a decade ago. These measures which Germany implemented have shown that unemployment can be driven down, even amidst a global economic crisis and even in a high labor cost economy.

But Hollande does not seem to grasp that relying on raising taxes even further was precisely not the path chosen by the German Social Democrats, his ideological soul mates. At the core, Mr. Schroeder grasped that the public sector's share of GDP could not be elevated any further for the economy to grow again. Any conservative would have had a much tougher time seeing through

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