Hollande Risks Vote of No Confidence Over Business-Friendly Legislation; National Debate Over Baguettes

Hollande Risks Vote of No Confidence

French President Francois Hollande took an unusual step today of passing law by decree, with no parliamentary vote.

Article 49.3 of the French constitution allows that, but doing so runs the risk of a no-confidence vote and dissolution of the government should the vote of confidence fail.

49.3 would seem to be an easy choice but it was last used 9 years ago. 

Business-Friendly Legislation

It's amusing what France considers "Pro-Business". The reforms include increasing the number of Sundays that shops can stay open from five to twelve and deregulation of notaries.

Please consider French Government Overrides Parliament to Ram Through Reforms

French president François Hollande took drastic action on Tuesday to ram through a package of business-friendly economic reforms, overriding parliament to stamp out a rebellion within his own ruling Socialist party and avert a government crisis.

The move underlined Mr Hollande’s determination to implement reforms intended to kick-start France’s sclerotic economy and which have been demanded by his European partners as the price for delaying the reduction of the country’s budget deficit.

The lack of parliamentary support for flagship measures is likely to ring alarm bells in Berlin and Brussels as concerns grow that the political tide in the eurozone, led by Greece, is turning against essential economic reforms and tough budgetary discipline.

The centre right opposition UMP party led by former president Nicolas Sarkozy said it would call a vote of confidence in response to the emergency action. Mr Hollande was gambling that the Socialist rebels would fall back into line in a confidence vote to ensure the survival of his government.

When it became clear on Tuesday morning that Manuel Valls, the reformist prime minister, could not be certain of winning a vote on the reform law, Mr Hollande convened an emergency ministerial meeting at the Elysée Palace. A rejection would have sent the wrong signal to the European Commission, a week before deciding whether to fine Paris for missing its deficit target.

The wide-ranging measures will extend Sunday trading hours, shorten labour arbitration procedures and deregulate notary and legal professions, among other reforms.

Martine Aubry, the daughter of former EU commission president Jacques Delors and an influential Socialist party figure, has attacked the plan to increase the number of Sundays shops can open from five a year to 12, calling it “social regression”. The green party and the far left parties were expected to oppose the bill too.

On the right, only a handful of UMP lawmakers had decided to break ranks with party leader Nicolas Sarkozy, who had called for his MPs to vote against the law despite it being largely inspired by a report he commissioned in 2007 when he was president.

“The Macron law is positive but it was long overdue and will have a minimal impact,” Giovanni Zanni, an economist at Credit Suisse, said. “If you look at the UK, most of these measures happened decades ago.”

Next on their agenda is tackling a rule that forces companies with more than 49 employees to comply with extra regulation mostly related to workers’ representation, which is so burdensome that business owners tend to curb their expansion in order to stay below the threshold. There are twice as many companies in France with 49 members of staff than with 50.

Minimal Impact

It is absurd to believe allowing shops to stay open an extra 7 Sundays will do anything meaningful for the economy.

And if you are going to risk a vote of no-confidence, why not make it meaningful?

The likely answer is had Hollande tried to do too much, he would fail the vote.

National Debate Over Baguettes

In a move that sparked a national debate, France's Top Baguette Baker Ordered to Stop Working Seven Days a Week.

Stephane Cazenave, who runs a boulangerie in Saint-Paul-les-Dax, Landes, faces a 1,500 euro fine for flouting a 1999 prefectural order obliging any bakery to remain closed for at least one day per week.

The ruling against Mr Cazenave, which he says will see him lose 250,000 euros a year and force him to lay-off some of his 22 staff, has ignited a storm in France, with the baker's plight seen as symbolising all that is wrong with anti-business regulations stifling the economy.

"I am treated like a thug just because I asked to work," said Mr Cazeneuve, winner of the "best baguette of France" award last year for his crusty loaves. "Working shouldn't be a crime in France," he told France 3.

"I opened seven days a week three and a half years ago. I create jobs and wealth and I don't see why one would hinder me doing so."
 
He emphasised that all his employees were given two days off a week, and that the ban was on the bakery itself. His case has succeeded in galvanising the fractious opposition centre-Right, split over how to deal with the far-Right Front National.

Francois Bayrou, head of the centrist Modem group, also supported the baker, saying: "There is perpetual suspicion, an inquisitorial doubt about those who want to work." In a country whose unemployment has hit record levels, he said: "One gets the impression that the desire to create new jobs is viewed as something bad in France and is punished."

Jean-Pierre Crouzet, head of the national baker's and confectioner's confederation said it made sense to uphold the rules to encourage competition by obliging people to buy bread elsewhere at least once a week.

Debate Over Euros

Please note the comment by the head of the baker's confederation:  "It made sense to uphold the rules to encourage competition by obliging people to buy bread elsewhere at least once a week."

Jean-Pierre Crouzet would have you believe that forcing people to buy inferior products is the way to increase competition. Why stop with baguettes? Why not cars, computers, and T-bone steaks?

The debate over baguettes is but an amusing side-show of the insanity of French law. The euro was supposed to fix such problems but it didn't and won't.

The reform moves by Hollande are at a glacial pace, as are reforms in Italy, Greece, and Portugal. Monetary policy cannot resolve differences in work rules, pension rules, minimum wages, retirement age, productivity, and a dozen other things.

And France insists on inane agricultural policy to "save the farms". Of course they want to "save the bookstores as well".

France is not serious about reform. Rather, France wants Germany to believe that it is. 

Eurosceptic Front National’s Le Pen Consolidates Lead

In "rally round the president" move Hollande's popularity soared following the Charlie Hebdo attack. Yet, that popularity was fleeting.

In the first presidential poll since Charlie Hebdo, Front National’s Le Pen Consolidates Lead.

It’s the first opinion poll on voting intentions this year, and the solid advantage enjoyed by Le Pen and her traditional-conservative Front National (FN) party appears to have been confirmed in the wake of the Charlie Hebdo shootings in Paris earlier this month. Front National is the only mainstream French political movement that shows willing to tackle the problem of rising Islamism, and this appears to have delivered them an definite electoral advantage. Le Pen now sits with 30 percent of first-round votes, a gain of 3-5 points since August.

Rise of Podemos

Elsewhere, debt piles up and tensions mount. Spain which is supposedly in recovery, has seen the rise of eurosceptic Podemos.

If there was a big recovery in Spain, we would not see results like this: Pessimism in Spain: 83% Say Economic Situation is Bad; Podemos Takes Huge Lead in Latest Poll.

In Greece, Bailout Talks Collapse in 4 Hours; Greece Says Extension is "Absurd"; 79% Support Syriza's Negotiation Stance.

Increasingly, people have had enough.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com