France is totally ‘bankrupt’, jobs minister admits as concerns grow over Hollande’s tax-and-spend policies

Peter Allen – Daily Mail Jan 29, 2013

France’s Socialist government was involved in a vast damage limitation exercise today after a senior minister admitted that the country was ‘totally bankrupt.’

Colleagues of Michel Sapin, secretary of state for employment, insisted that he was merely highlighting the faults of the last conservative administration, after the minister said the government’s tax-and-spend policies are just not working.

Finance minister Pierre Moscovici said: ‘What he meant was that the fiscal situation was worrying’, and added that the last government, led by Nicolas Sarkozy, had accumulated £513billion of debt.

Just half a year since his party came to power, Mr Sapin yesterday told radio listeners: ‘There is a state but it is a totally bankrupt state.

‘That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.’

While the admission was unlikely to have been intentional, it highlighted huge concern at President Francois Hollande’s handling of the economy.

An online poll in today’s Le Figaro newspaper showed, by lunchtime, that 80.5 per cent of readers agreed that France was indeed bankrupt.

Despite all this, Mr Moscovici insisted: ‘France is a truly solvent country, France is truly credible country, France is a country which is starting its recovery.’

Mr Moscovici also insisted that France is in a position to ‘meet its financial obligations, including the payment of its employees, thankfully.’

Since Mr Hollande came to power, unemployment and the cost of living have continued to spiral, while ‘anti-rich’ measures have provoked entrepreneurs to leave the country.

The President is currently trying to revive France’s economic fortunes by cutting spending by the equivalent of more than £51billion.

Mr Hollande has also pledged to increase taxes by £20billion over the next five years.

The Bank of France has already produced data showing that capital investment is leaving the country every day, along with the business people who helped to build it.

Among those who have moved their vast wealth out of France are Bernard Arnault, the country’s richest man.

Mr Arnault, the 63-year-old head of luxury goods group LVMH, insists that he moved the cash and assets to Belgium for ‘family inheritance reasons’.

But others are convinced that, like numerous other tycoons and celebrities, he simply wants to avoid taxes including a 75 per cent top rate on income being introduced by President Hollande.

Mr Arnault, who owns numerous homes around the world including one in London, applied for a Belgian passport soon after Mr Hollande’s Socialists won presidential and parliamentary elections last year.

Earlier this year, Hollywood star Gerard Depardieu became another high-profile Frenchman moving his assets abroad.

The Green Card and Cyrano de Bergerac card obtained a Russian passport, bought a house in Belgium, and put his multi-million pounds Paris town house on the market.

There have even been reports that Nicolas Sarkozy, the last President of France, is preparing to move to London with his third wife, Carla Bruni, to set up an equity fund.

Prime Minister David Cameron has already said that Britain will ‘roll out the red carpet’ to attract wealthy French people.

Shrinking economies make it difficult for eurozone countries to get debt levels under control despite pushing through harsh spending cuts and reforms because shrinking output makes the value of a country’s debt as a proportion of the size of its economy worse.

Last week the IMF downgraded its growth forecast for the eurozone from 0.1 per cent to a minus 0.2 per cent contraction, warning that the eurozone ‘continues to pose a large downside risk to the global outlook.’

France is Europe’s second-largest economy and is suffering from rising unemployment, with figures up 10 per cent on last year.

Meanwhile Greek opposition leader Alexis Tsiprassaid said Europe must abandon austerity policies and hold a summit to make Greece’s debt sustainable.

Mr Tsipras said a conference similar to the one that brought debt relief to Germany in 1953 is the only way to solve their financial crisis.

Greek GDP fell 6 per cent in 2012, the lowest in Europe, as the country struggled with the financial crisis. Portugal’s GDP fell 3 per cent, while Italy declined by 2.3 per cent and Spain’s GDP shrank by 1.4 per cent. 

The French GDP rose by 0.2 per cent last year while Ireland grew up 0.4 per cent and Germany increased by 0.8 per cent.