Prof Granville on the links between the Euro and France’s competitiveness in The Telegraph

Prof Brigitte Granville, CGR Director, has been quoted on The Telegraph on his Tuesday 7th of December edition. Prof Granville comments are included in an article by Ambrose Evans-Pritchard analysing the economics roots of Marine LePen’s Front National rise, after the first round of the regional elections hold on Sunday, December 6th, that saw the Front National swept half the French “Communes”.

In his piece Evans-Pritchard outlines the links between the Euro crisis and the rise of the Front National, which has allowed them to gain 55% of the working class vote, amidst a terrifying economic slump, with an unemployment rate climbing up to a 18 year high of 10.6%. This dire situation has benefited a renewed Front National that combines political and economic nationalism. A mix highly popular, according to Professor Jacques Sapir, among the French regions that impacted de-industrialisation and “globalisation shock”. In his remarks Prof Granville, puts on the spotlight the links between the Euro and the lost competitiveness of French economy:

“Prof Granville said there is no doubt that France’s problems are home-grown. It is entangled in a thicket of unworkable laws. There are 383 taxes, of which 50 cost more to enforce than they yield. The labour code is more than 3,000 pages, acting as a gale-force headwind against job creation.Yet monetary union has played its part, too. The eurozone’s twin policies of fiscal and monetary contraction from 2011 to 2014 aborted the recovery and led to a deep recession that went on long enough to cause lasting economic damage through labour “hysteresis”.Prof Granville said there is another twist. France and Germany moved in radically different directions after the launch of the euro. While Paris introduced the 35-hour working week, Berlin pushed through the Hartz IV wage squeeze and an internal devaluation within EMU – a beggar-thy-neighbour strategy.
The result is that France has lost 20pc in labour cost competitiveness. It had a current account surplus of 2.5pc of GDP at the start of the last decade. It is now bleeding national wealth slowly – as is Britain, for different reasons – with a cyclically adjusted deficit of 1.5pc.She compared it to the slow torture France endured in the early 1930s under the Gold Standard, stoically accepting the “500 deflation decrees” of premier Pierre Laval. The dam broke in 1936 with the election of spurned outsiders, then the Front Populaire.”

Prof Granville draws his comments from his most recent work on the CGR Working Papers series. “Elites, Thickets and Institutions: French Resistance versus German Adaptation to Economic Change, 1945-2015” co-authored with Dr Martha Prevezer and Jaume Martorell, that details how the Elite Thicket forming between state and business upper echelons blocks institutional and economic change in France; and “Conflicting incentives for the public to support the EMU” jointly with Dominik Nagly, that highlights how the Euro regime is dampening southern economies economic perspectives but remains populars due the “fear discourse” regarding the consequences of an Euro break-up.

You can continue reading Ambrose Evans-Pritchard article:

“Euro regime is working like a charm for France’s Marine Le Pen”

Or you can read Prof Granville CGR Working Papers: