Eye On France: How Bad Is The Catastrophe?

The news is having a tough time today because of statistics. As most of the Paris papers continue to sift through the ruins of the latest Yellow Vest clashes, the national statistics bureau and the financial daily Les Echos suggest that, in fact, things are going swimmingly.

Recently, the French bosses' union, the Medef, was bewailing what they called the “catastrophic” impact of the 18-week-old Yellow Vest protest movement.

The economy and finance minister, Bruno Le Maire, says the protestors are dangerously undermining growth.

Yesterday, the budget minister, Gérald Darmanin, joined the chorus, claiming, somewhat incoherently, that les gilets jaunes had “destroyed more jobs and wealth than the past ten years”. That doesn't make much sense, even grammatically, but the minister was clearly trying to evoke a huge threat to national survival. The shaky syntax adds to the sense of gravity.

The problem is, it's all exaggerated guff.

White lies, damned lies and statistics

The calm folk at the National Institute of Economic and Statistical Studies, L'Insee, have put the Yellow Vests through the number cruncher and say the protest movement's economic impact will be no worse than “moderate”.

For the final three months of last year, including the most intense six weeks of Yellow Vest protests and road blocks, the statisticians calculate the total effect of the demonstrations at one-tenth of one percent of Gross National Product, a substantial amount of moolah, but a long way from Armageddon.

To put the economic impact of the gilets jaunes in perspective, they've had about the same effect on economic growth as last year's strikes at the national rail company and Air France.

The real problem with the economy, according to the same statisticians, is that French households are not spending any money. National consumption dropped to zero in the last quarter of 2018.

In fact, France is doing fine

Financial daily Les Echos continues the anti-catastrophe theme with the news that Emmanuel Macron's France is doing better than most of us think.

Based on the latest six-monthly report from our friends at L'Insee, consumers are consuming and jobs are being created.

Les Echos says it's all down to the economic policies of President Emmanuel Macron, and that he must not change direction.

Far from the image of France as a smoking ruin being touted by what Les Echos calls “unshakable revolutionaries” and by the political opposition, the figures paint a different picture.

Even if the predicted French growth rate for the first half of this year is a modest 0.4 percent, that's still better than the rest of the Eurozone. And that against the uncertain background provided by the dithering Brits and their bally Brexit.

The French economy is resilient.

The fruit of earlier good decisions

The statistics show that the government shift of emphasis from social charges on workers to the broader CSG, or generalised social contribution, has boosted individual spending power.

Which brings us to today's billion euro question for the good folk at the national statistics institute: if individual spending power has, indeed, been boosted, why are the individuals not spending it?

Because, as we learned earlier from a different report on the same findings, French consumption figures are not exactly climbing out of their cage.

Les Echos ends its enthusiastic if incoherent praise of presidential policy by advising Emmanuel Macron to hold the line. Current economic planning is balanced and efficient. There's no need to go backwards on the question of wealth tax, nor to squeeze all businesses into the same tax bracket.

That would just scare the business community by sending out contradictory signals.

The message is clear and simple: Macron must stick to his guns. At least until the shooting starts.