President Francois Hollande won the French Presidential election on the promise that his government would largely abandon the austerity measures adopted by his opponent, former President Nicolas Sarkozy. Naturally, this was an appealing alternative to many French citizens since the burden of increased taxation was intended to fall largely on businesses and the more affluent members of French society. Citizens earning above €1000000 per annum would face tax bills of 75%. Mr Hollande pledged that by following his economic prescriptions, the French deficit would fall to below the 3% level demanded by the EU convergence criteria for membership of the Euro, within two years. Mr Hollande has now accepted that his government will miss this target and the deficit will come in at or above 3.7% of the nation’s GDP.
Defending his government’s approach, Mr Hollande claimed: "In two years, we have performed a structural recovery (which) is as unprecedented as it is significant. Addressing our accounts is a financial obligation... but it is also an obligation of sovereignty because France must never be in difficulty in the markets."
A German board member of the ECB was critical of France’s alternative approach to the sovereign debt problem, Jens Weidmann remarked: “The reform course in France seems to have floundered. The crisis that we are facing is a crisis of confidence, and this confidence cannot be gained if we postpone the tackling of the root causes of the crisis".
The current figure for the deficit is believed to be 4.5% and unemployment in France is above the 3 million mark; 10.6% of the workforce is currently idle.