On November 15th the French state ran out of money
Three weeks ago, on Nov 15, a ragtag army of protesters dressed in the yellow hi-visibility jackets that are compulsory for French motorists were preparing to travel to Paris for a day of protests that, while may have started peacefully, soon turned violent and ugly. By the end of the weekend, more than 100 demonstrators and police had been injured and many of the capital’s grandest boulevards had been turned into a war zone. But something else happened on that day as well. The French state ran out of money.
Nov 15, according to calculations by the Institut Molinari, a rare French free-market think tank, was the day all money the government raises in taxes had been spent, and it would have to start borrowing to cover its lavish spending for the rest of the year.
It is the earliest date of any of the major European countries, and it is projected to get worse and worse over the next few years. A coincidence? Not exactly. In fact, the rebellion against Emmanuel Macron, the president, is the inevitable result of a failed economic model.
For decades, the state has funded an opulent welfare state with increasingly punishing levels of taxation. But time is running out, and Macron’s attempts at reform have so far been laughably inadequate. With his meek surrender to the protesters, it is impossible to see him turning around his presidency now – and the French crisis will get worse before it gets better..
In truth, you can’t reform an economy with stagnant demand. So far, Macron has been too desperate to show he is a good European by sticking to the eurozone’s budget rules. His one chance of success was a Reagan-ite programme of radical tax cuts to improve incentives and reflate the economy. But that would have created a rupture with Brussels, and Macron wouldn’t risk that…
www.telegraph.co.uk/business/2018/12/09/yellow-vest-protests-fuel-fire-frances-malaise/
Tess