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Nicolas Sarkozy’s Economic Stimulus Package

Introduction

Sarkozy is the present president of the French conservative party namely UMPS. In the presidential election held in 2007, he won nearly about 85% of the vote. The number of members of UMP has significantly increased during his presidency. Sarkozy extended his support to the Yes in the French referendum on the European Constitution. (Duthel 73).

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France’s social and economic policies underwent a radical transformation in the year 2005 due to new policies introduced by Sarkozy. (Duthel 73). On September 8, 2005, Sarkozy had a meeting with Le Monde due to his call for transformation where he strongly stressed that the French had been dubbed for the last three decades by hollow promises and condemned what he regarded as unrealistic policies.

Sarkozy’s demand for radical transformation

Sarkozy’s demand for a radical transformation in French’s social and economic policies includes the following:

  • Sarkozy advocated for an easier, fairer, and simplified taxation system with lesser loopholes and proposed a maximum tax rate of fifty percent of revenue, which will include all direct taxes combined.
  • Sarkozy endorsed initiatives thereby denying or reducing social support to unemployed citizens who declined to take up the employment which was offered to them.
  • Sarkozy crusaded for cutbacks in the budget deficit, advocating that the French government has been living off credit in the last few years.
  • He christened his new economic policies as France’s liberal, which means towards economically libertarian policies or laissez-faire system or with a derogatory suggestion, ultra-liberal.
  • It is to be remembered that Le Liberalisme is a debatable issue in France, while some whole-heartedly supported them and with the majority of the left and some of the right turning it down. (Duthel 73). Sarkozy turns down the label of liberal and christens himself as a pragmatist. Sarkozy was involved in another volley of controversy by emphasizing that he opted for reform of France’s immigration policies with quotas intended to take in the skilled workers required by the French economy. He also emphasized restructuring the present French policies for foreign students asserting that it facilitates foreign students to have open-ended curricula to acquire resident status in France. In its place, he prefers to choose the best-talented students to the best curricula in France. French copyright law underwent radical changes due to the passing by the French parliament, a contentious bill known as DADVSI in early 2006. (Duthel 152).

Since there was no consensus in his party for this plan, and Sarkozy paced in and conducted a dialogue between various parties associated with this process. Sarkozy was criticized that he was personally and unofficially involved in some amendments to the law which codified vibrant penalties against planners of peer-to-peer systems by business groups like EUCD.info and the Odebi League.

Sarkozy attempts to project himself as an energetic man duly supported by the advertisement campaign for this reason mainly to find solutions to the contemporary issues of France. The left party used to criticize Sarkozy that he is a demagogue and more conversational leader and for attaining political benefits, he will go to any extent. (Duthel 152).

During his election presidential election campaign, Sarkozy pledged to introduce various economic stimulus packages like the introduction of targeted tax incentives, deep cuts in government spending, and loosening the 35—hour workweek law. (Duthel 152).

To counter the economic crisis, Sarkozy had called for an end to capitalist excess, to introduce tighter bank regulations, and France to become a more interventionist state. Due to the global financial crisis, France has not been much affected as French people are not having personal debt and there is an immediate need to rescue any bank in France. Due to the global economic crisis, France’s GDP has shrunk by 3.3% as compared to 5.3% in Germany and 3.7 percent in Britain (Economist 2009).

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Sarkozy cautioned in the G-20 London summit held during April 2009 that France wants stricter financial regulations to avert a future global financial crisis. Sarkozy blamed that “Anglo-Saxons was responsible for the present global economic crisis. France wanted a financial regulator on a global basis which is strongly rejected by the USA. Sarkozy’s warning highlights the emerging fissures between global leaders. Sarkozy is more worried about the two factors of the current global financial crisis as it would have a greater impact on France’s GDP growth and unemployment rates. (Bremmer & Webster 2009).

The main reason for Sarkozy’s revolt may be attributed to a sharp slip in Sarkozy’s ratings in France, which reduced to 36% in April 2009. Though he got a small boost in his rating after the G20 summit in London in March 2009, the April 2009 end polling revealed a steep slip. In a poll during April 2009, respondents reposed confidence in the capability of trade unions than that of Sarkozy to alleviate the effect of the recession.

As far as crime is concerned, Sarkozy has been tough and as minister of the interior, he approved a drive to deport undocumented immigrants. However, one has to remember here that Sarkozy himself has an immigrant background as his father descended from Hungary and his mother was a Greek Jewish. Immediately, after being elected as President of France, he amended to try the juvenile offenders between the ages of 16 to 18 as adult offenders. He has the laurel of one of the very few French presidents to support affirmative programs, and he is the first to nominate color people to cabinet positions.

Immediately, after the assumption of president office, Sarkozy introduced many administrative reforms as per the details given below:

  • He instructed his cabinet ministers and conservative government to report directly to him.
  • Cabinet ministers were required to offer a report analyzing their departmental function on the yearly basis.
  • An annual presidential address in the French parliament has been introduced during his regime.
  • He interrupted the everyday business of the government and media was dominated with his news in an unprecedented manner.

Global Economy and France

France is greatly intertwined with the global economy and has derived many advantages from globalization. More than fifty percent of France’s GDP is comprised of the exports and imports of goods and capital account, which is the highest proportion as compared to any other nation in the globe. Foreign investments, especially investments from American pension funds which control and own about fifty percent of all shares traded on the stock exchanges of France. Hence, as the US is being affected due to the subprime mortgage crisis, its impact is being witnessed in the French share market. Further, about thirty-three percent of French employees are working for companies that are partly –owned by foreign investors. (Kesselman et al 130).

However, French involvement in the global economy and the current performance of the French economy more or less created severe political tensions. Further, in France, the effect of economic determinants on domestic politics centers greatly on the form of political institutions and partisan alliances.

With the advantage of chairing the EU Presidency at a critical juncture, Sarkozy shifted beyond his national podium in meeting the challenges of the financial crisis. He was the mastermind in organizing the G20 meet for the deliberation of the global financial crisis both in Washington and in London. Though his idea of establishing global macroeconomic regulation was opposed by the US, Germany, etc, it did open the gateway for the French notion of a European economic state. This connotes that there existed a fundamental French proposal to advocate for greater economic assimilation in the European Union.

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Sarkozy Stimulus Economic strategies

Sarkozy is now started to urge the European Central Bank to design a scheme to absorb government debt, as being done by the central banks of the US, Britain, and Japan. Further, Sarkozy vehemently worked at the G-20 summit held in April 2009 with the main agenda namely curbing the tax heavens that will offer a stimulus package in the French economy. (Vinocur, March 2009).

In November 2009, France disclosed its plan to avail a big loan of Euro 35 billion to give stimulus to its economy. According to Sarkozy, this will be invested in augmenting the infrastructures in universities across France, to strengthen the R&D mechanisms, to improve life sciences, financial incentives to the revolutionary small businesses, and to enhance the renewable energy resources. However, critics argue that in the short run, the huge government spending will deteriorate the French economy due to the dire of huge governmental spending by France. However, a survey poll on this topic has indicated that about fifty-four percent of questionnaires opposed this huge governmental spending.

It is to be noted that France during the year 2008 spent euro fifty-five billion mainly to service its total debt of euro 1.3 trillion. French government audit body had already warned the French government to minimize its government spending. Further, it is also against the poll promise made by Sarkozy that he will minimize the government spending if elected as French President.

It is estimated that France’s budget deficit will reach a record high of 8.3 % during the end of 2009 as against of deficit of 3.4 % during 2008. The increased French government spending on economic stimulus packages and decrease in tax receipts due to the current recession was the main reasons for the steep increase in the budget deficit. (www.theage.com).As per French government forecasts, this will increase France’s debt from 77% of the economic output during 2009 to 91% in 2013.

France’s economy is in a dire state and taking big loans now will have an impact on its economy as Sarkozy already invested euro 26 billion in economic stimulus packages to balance the international financial crisis. (www.theage.com).

Conclusion

Why there is a sudden slip in the ratings for Sarkozy? This is mainly due to increasing job losses and the closure of industries in France. Though France’s economy is much stable than that of the UK and Germany and as there is no subprime mortgage crisis in France, but France is still witnessing the impact of the global financial crisis. Jobless rates reached the height of 8.6% in February 2009, which is well ahead of the average of the European Union.

Initially, French voters were somewhat happy with the handling of the financial crisis by Sarkozy’s government. However, the later developments in France in 2008 and 2009 had shattered their hopes. There were substantial job losses due to the closure of the Continental tire factory in Picardy and the Caterpillar factory in Grenoble. Sarkozy’s pledges to save these plants later became futile. French voters have become wary of hollow promises as they are now under the impression that Sarkozy is interested in making hollow promises only and not interested in fulfilling the same. (Economist 2009).

In the second half of 2008, Sarkozy held the European Union presidency and won the hearts of the French by indulging in shrewd diplomatic interactions, starting from the Middle East to Georgia thereby making France in the headlines. Even now, French opinion polls approve how Sarkozy safeguards the French interest abroad but remain concerned that whether he can do more to arrest job losses at home.

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One can witness a growing opposition to Sarkozy’s leadership in the middle of 2009 as trade unions were able to draw nearly 3 million people who were transported through the union-hired coaches on May 1st, Labour Day celebration at Paris.

It is to be observed that France’s two-layer labor market excessively safeguarded permanent jobs and thus supported companies to employ employees on convenient short-run contracts. Thus, during the current financial crisis, there were considerable job losses in this non-permanent sector. Public concern was sparked over this labor system, which resulted in rising unemployment and the French government’s impotency to control this. Hence, French political custom, especially the association between the structure of government and public opinion was one of the crucial elements that shaped French leaders ’ establishing of and the public retort to the international financial meltdown.

According to Sarkozy’s close aides, the political risk has become increasingly high recently and the risk of violence and revolt is very high. The recent protests by trade unions, fishermen, students in 2009 all reveal that these sections are badly impacted due to economic shocks. Economist expert, Nicolas Beverez cites the absence of civic institutions below the state as the reason for the same. This demonstrates why direct action is so famous in France and why protests become so sweeping than in any other nation.

Sarkozy can count on two advantages as the opposition party in France is weak, has no credence, and they are divided. Further, Sarkozy may lose some popularity in 2009 due to the impact of the financial crisis but is well above the depth quantified by his predecessor Chirac. During the student protests in France in 2006, Chirac had the worst poll rating of just 16%. Comparing to this, Sarkozy is still having a good rating among the French. (Economist 2009).

Thus, Sarkozy’s endeavor to discipline the French economy implies the national leader’s disaster outlining and the public reaction to this and cannot be regarded in separation from its political perspective. Lack of strong political opposition party in France, French political erudite, and the global and EU platforms offered a precious admiring comment to the crisis–management evaluation. In a nutshell, national background issues, crisis opportunism, and individual leadership acumen framed French crisis administration in a international financial crisis.

Works Cited

Bremmer, Charles & Webster, Phillip. 2009. Nicolas Sarkozy’s Threat to Walk out of Global Summit. Web.

Duthel Heinz. Nicolas Sarkozy. Paris: Lulu.com, 2008.

Kesselman Mark, Krieger Joel and Allen & Christopher S. European Politics in Transition. Paris: Cengage Learning, 2008.

“Super-Sarkozy falls to earth.” Economist 390.8627 (2009): 55-56. Academic Search Premier. EBSCO. Web.

Vinocur John. 2009. Politicus; A Circumspect Sarkozy Ponders the Economy. Web.

WWW.Theage.com. 2009. France to Take Big Loan to Boost Economy. Web.

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StudyCorgi. (2021, November 5). Nicolas Sarkozy’s Economic Stimulus Package. Retrieved from https://studycorgi.com/nicolas-sarkozys-economic-stimulus-package/

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StudyCorgi. 2021. "Nicolas Sarkozy’s Economic Stimulus Package." November 5, 2021. https://studycorgi.com/nicolas-sarkozys-economic-stimulus-package/.

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StudyCorgi. (2021) 'Nicolas Sarkozy’s Economic Stimulus Package'. 5 November.

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