French officials warn of sacrifice, but few people are listening

Officials have warned of “blood, sweat and tears” ahead if France is to save itself from the economic contagion sweeping Europe, but the message has failed to impress a populace preoccupied with more immediate concerns and largely unperturbed about the country’s finances.

President Nicolas Sarkozy and German Chancellor Angela Merkel have teamed up to press weak members of the Eurozone to cut subsidies and government jobs, raise taxes, crack down on corruption and sell off state assets to bring down their debt levels.

As France faces pressure to swallow some of the same medicine, many say it’s the fault of U.S.-based rating agencies and wealthy citizens who aren’t paying their fair share to fund the country’s traditionally generous social benefits.

With only five months to go before the presidential election, that attitude makes it difficult for Sarkozy, already dubbed the “president of the rich,” to push through measures to shore up France’s treasured AAA bond rating.

“Deep down, everyone realizes there’s something wrong, but a lot of people have been feeling the crisis for some time, so it doesn’t seem like anything new,” said Laurence Tricot, a 24-year-old student.

Young people in particular are more concerned with concrete problems such as finding a job and a place to live than abstract concepts such as the markets, he said. “Do people understand or realize what the sovereign debt crisis is? Probably not, and they probably won’t until it directly affects them.”

A report Tuesday by an influential Brussels-based think tank indicated that they might have to start paying attention pretty soon. The Lisbon Council ranked France’s overall economic health 13th among the 17 Eurozone countries.

“Alarm bells should be ringing for France,” declared Holger Schmieding, principal author of the report and chief economist at Germany’s Berenberg Bank, a partner in the study. “The results are too mediocre for a country that wants to safeguard its place in the top league.”

The study came on the heels of an erroneous report last week that Standard & Poor’s had cut France’s debt rating, eliciting outrage here.

France is faced with the bill for decades of borrowing by governments of both the left and right. Much of the money has been used to finance the country’s top-heavy state machinery and a generous welfare system, which the French proudly regard as part of the country’s “cultural exception.”

The workweek is a maximum 35 hours, and almost half of those older than 55 are no longer in the workforce. There are sizable government payments to sick workers and those who give up their jobs to look after children or ill relatives. A family receives an extra $388 a month from the government if it has three children and $218 a month for any additional child.

Despite such prosperity, the entire period after the first international oil crisis in 1973 is considered a crisis here after three postwar boom decades. And there has been a cost.

France’s debt burden is about 82% of gross domestic product and expected to peak at 87% next year. In contrast, Italy’s is about 118%.

The government announced austerity measures this month with a declaration by Prime Minister Francois Fillon that a period of “blood, sweat and tears” lay ahead. The center-right administration said it would implement a plan to raise the official retirement age from 60 to 62 in 2017, one year earlier than previously planned. But exceptions would remain that allow many people, including various categories of public service workers, to retire much earlier.

Taxes on the largest corporations are increasing by 5%, and the value-added tax on goods and services, including restaurant meals, books and public transportation, is also increasing.

But there is growing anger among those who say that Sarkozy, regarded by the disenchanted as the “president of the rich,” is squeezing the lower and middle classes while sparing many tax breaks for the wealthy. There are more than 500 legal tax deductions in France, including for investing in property for rental development, investing in French overseas territories and hiring child care or cleaning staff.

Angelique Vaugon, 38, a café waitress in central Paris, said she was skeptical that cost cutting would have the effect the government envisions.

“In any case, it is always the middle class that pays for the rest,” she said. “The very rich are never affected.”

Still, citizens appear willing to go along with an austerity program if everyone makes an effort.

Frederic Dabi of IFOP, which conducts public opinion polls, said a recent survey showed the majority of respondents felt that they had been living through a crisis since the 1970s, so were relatively unmoved by the European debt debacle.

“French people were already worried about losing their social status and deeply pessimistic for the future,” he said. “At the same time, paradoxically, they believe it is better in France than elsewhere. Right now it’s a case of ‘Crisis, what crisis?’”

“But if necessary, people tell us they are ready to make sacrifices,” he said.

Jean-Marie Pernot of the Paris-based Economic and Social Research Institute said that for people to sacrifice, they need to be persuaded the burden is being spread fairly.

“The idea that Nicolas Sarkozy is the president of the rich is strong in people’s minds,” he said. “The problem is there’s this feeling among the public that it’s always the same people who pay.”

And that the crisis is largely out of their hands.

Marc Richard, 49, a medical researcher, said he was fed up with listening to depressing economic news on the radio every day. “France will survive the crisis,” he said. Asked how, he laughed and pulled his hands out of his pockets. His fingers were crossed.

“This is France, don’t forget. Everyone grumbles but carries on. The place simmers away, then one day it just explodes,” he said. “The politicians know this is a danger and it frightens them. But they know, and we know, they have to do something. Just don’t ask me what.”

Willsher is a special correspondent.