When President Francois Hollande steps up to the podium in the splendid Elysee Palace at 16.30 Paris time, 15.30 GMT on Tuesday for the third formal press conference of his 20-month old presidency, the first question on everyone’s lips is likely to be about the revelations of his apparent affair with a film actress.
How he deals with this embarrassing issue –Valerie Trierweiler, his partner and France’s first lady, remains in hospital recovering from the shock – will inevitably overshadow an event originally intended to concentrate on the economy.
But the financial markets, business leaders and France’s European partners will nonetheless be watching most closely what Mr Hollande has to say about his New Year resolution to inject some much-needed vitality into the French recovery, which is lagging behind those of the country’s biggest neighbours.
What they are looking for is evidence of a marked policy shift away from France’s high tax, high spending regime and towards more business-friendly policies that will boost confidence and growth.
Here are some key points to look out for:
• Public spending: the Socialist government is already committed to a relatively modest €50bn savings in France’s whopping public spending bill up to 2017. Medef, the employers’ federation, wants to boost that to a target of €100bn over five years, which it points out only amounts to 1.7 per cent spending cut per year. Will Mr Hollande put a figure on further cuts?
• Taxes: Mr Hollande has heaped some €30bn in new taxes on business and households since he took office in May 2012, forcing France’s overall tax burden up to 46 per cent of gross domestic product. Now he says that is too high. The government’s current plan is for taxes to stabilise in 2015. It has launched a review of the tax regime with a view to tax cuts before the end of Mr Hollande’s mandate in 2017. Medef wants a E50bn cut in corporate taxes alone, spread over five years. How far might Mr Hollande be prepared to go?
• Labour costs: The biggest bug-bear for French business, which it blames for France’s loss of competitiveness. Medef wants a €10bn a year cut in social charges on employment – on top of a €20bn tax break the government has already put in place. The president has already signalled he is ready to go further – but he may not be able to be specific without first squaring off trade unions nervous about him giving away too much to Les Grands Patrons.
• Labour regulation: Mr Hollande talks up slashing the administrative red tape that tangles up business – a “simplification shock”, he calls it. But a key issue is whether he is willing to push through deeper reform of France’s 3,000-page labour code that tightly governs employment terms, sharply restricting the latitude for hiring and firing.
• Business pact: in his New Year message, Mr Hollande offered a “responsibility pact” with business to boost employment. Medef promises 1m extra jobs in return for the €100bn it is demanding in tax and labour cost reductions. But employers will want to hear what conditions the president expects for any concessions he makes.
• Mr Hollande has promised an initiative with Angela Merkel, Germany’s chancellor, in the spring to “add more impetus” to the EU, but has yet to spell out what this might add up to.
• He will doubtless address France’s military intervention in the Central African Republic, where 1,600 of its troops are struggling to help African peacekeeping forces stem a murderous spate of inter-communal violence. Will he say more troops are needed?