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Last Updated: Tuesday, 1 May 2007, 05:55 GMT 06:55 UK
Cold comfort for French economy
By Robert Plummer
Business reporter, BBC News, Lille

If Segonomics and Sarkonomics sound unappetising to you, how about Ben & Jerrynomics?

Sticker from Ben & Jerry's fake presidential campaign
A spoonful of ice cream helps the economic medicine go down

Nicolas Sarkozy and Segolene Royal are trying to impress the French with their economic programmes as the final round of voting nears.

But some of the most prominent election-related posters in France right now are promoting ice cream, not politics.

In a shameless piece of opportunism, Ben & Jerry's have dressed up their familiar cow mascot in a presidential sash and launched a fake campaign, complete with website and slogan: "For a greedy France."

But if nothing else, the posters at least provide some light relief in a presidential race that is becoming increasingly fierce.

"Some people manage to work 35 hours a week - for us it's more like 70"

Broadly speaking, Ms Royal advocates traditional socialist economic policies of state intervention, including a higher minimum wage and subsidised entry-level jobs for young people.

Mr Sarkozy, by contrast, wants to promote free-market measures, sidestepping the 35-hour working week by scrapping punitive taxes on overtime pay.

Even so, both agree on policies that seem remarkably generous by hard-nosed Anglo-Saxon standards.

For instance, they both advocate paying people who lose their jobs the equivalent of 90% of their salary in social security benefits - Ms Royal for one year, Mr Sarkozy for "as long as necessary".

However, Mr Sarkozy does temper that by saying that those who refuse two successive offers of jobs for which they are qualified will get no further benefits.

Centrists' view

Probably the most important critique of the two candidates' programmes is coming from the campaign of third-placed centrist candidate Francois Bayrou, whose supporters are expected to determine the outcome on 6 May.

Despite being eliminated from the race in the first round, Mr Bayrou has taken part in a TV debate with Ms Royal.

SEGOLENE ROYAL
Campaign poster of Segolene Royal
Increase minimum wage to 1,500 euros a month ($1,900; 950)
Create 500,000 state-backed entry-level jobs for young people
No tax breaks for high earners
New taxes on firms that pay share dividends instead of investing profits

He has also had some harsh words for Mr Sarkozy, whom he likened to Italy's controversial ex-Prime Minister Silvio Berlusconi for being too close to big business and the media.

But Mr Bayrou has made clear he does not support Ms Royal's spending plans as outlined in her presidential manifesto.

Mr Bayrou's advisers have gone further, denouncing key aspects of her economic policies.

Christian Saint-Etienne, an economist who helped draft Mr Bayrou's programme, said there was very little chance of finding common ground with the socialist candidate.

"She would have to break with the extreme left, reconsider her plan to create 500,000 entry-level jobs and seriously shrink the size of the state and the public spending that is causing our growth to atrophy," Mr Saint-Etienne told Le Figaro newspaper.

"Essentially, the economic programme that's closest to ours is Nicolas Sarkozy's," he said.

"But in terms of institutions and the political process, we have many more points of convergence with Segolene Royal."

Structural change

Both candidates propose headline-grabbing structural reforms which have come under media scrutiny in recent days.

Ms Royal has reached out to the environmental lobby by saying France should reduce its reliance on nuclear power to 50% of its electricity generation, as opposed to 80% at present.

NICOLAS SARKOZY
Campaign poster of Nicolas Sarkozy
Remove taxes and social charges on overtime pay, encouraging people to work more than 35 hours a week
Impose new 50% ceiling on personal taxation
Replace only 50% of civil servants entering retirement
"Marshall plan" to train young people in disadvantaged areas

She gives no indication of how this might be achieved beyond saying that "France is well-placed to become a world leader in renewable energy".

But her suggestion comes at a time when some people in Britain are starting to envy France for its use of nuclear power instead of climate-changing fossil fuels.

For his part, Mr Sarkozy has been questioned about his plan to reduce the size of the civil service.

Amid growing concern about the size of France's public debt, which is now more than 66% of its gross domestic product, Mr Sarkozy's main idea is to replace only 50% of retiring bureaucrats.

Estimates indicate this would save between 1.4bn and 1.7bn euros a year.

However, some analysts have expressed fears that the quality of public administration would suffer as a result.

Mr Sarkozy says his version of natural wastage would bring the French civil service back down to levels last seen in 1992, when Francois Mitterrand was president.

"I don't have the impression that France was under-administered at that time," he remarks dryly.

'Precarious'

Whoever wins, "the new president will inherit a precarious economic situation," says Global Insight economist Sonia Pangusion.

"Despite reasonable economic growth in 2006, the economy failed to reap all the potential benefits from the far brighter international environment."

A loss of French market share and competitiveness, an inflexible labour market, substantial public ownership and the poor state of public finances are among the problems she identifies.

"Neither [candidate] can deny that France's economic woes need significant action, but the measures they propose could lead to wildly different outcomes," she adds.

The successful candidate needs to be ready to take decisive measures. If not, the French economy could end up alongside that tub of Ben & Jerry's - in the deep-freeze.


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