45 million Frenchmen
By RICHARD BAILEY
"EARLIER this month the Economic Commis- .1_ sionn for Europe (ECE), the United Nations body housed in the Palais des Nations at Geneva, reported that trade had increased more rapidly within the six Common Market countries than in the rest of Europe. Even before this expert opinion became available, London was suddenly full of people saying that Britain should have joined the Six back in 1950 when the Schuman Plan was first proposed. The stock answer to this is that the French would never have stood for a Common Market that included Britain— an intransigence generally explained by the assertion that the French economy was in about the same punch-drunk state as the political system under the Fourth Republic. Is this true? And, if so, what sort of shape is the French economy in now-----as July 1, the date for the next round of tariff cuts, approaches?
Four years ago J. M. Jeanneney wrote a book called Forces et Faiblesses de L'Economie Imncaise in which he analysed developments since the war. last year M. Jeanneney became Minister for Industry in the Debr6 Government; and the facts recorded in his book became matters of more than academic concern to him. The weaknesses he had seen in the French economy were—at the top of the list---dithering political leadership; followed by stagnant popu- lation, a weak balance of payments position abroad, a persistent•budget deficit at home, ris- ing prices, and exorbitant interest rates, which kept industrial investment below the level needed.for a satisfactory rate of growth.
But now, the population of France has started to increase. After sticking at around 40 million for the greater part of this century the total is now 45 million, and is still going up. So M. Jcanneney's main worry looks like clearing itself up. And his analysis was largely concerned with ways of strengthening the economy and stopping inflation—which, the' postscript to the new edi- tion shows, is now less of a problem. How has this happened?
In this age of economic miracles the French have had their own characteristic visitation. The currency revaluation and trade liberalisation measures of December, 1958, marked the end of economic policy by arriere-penst;e characteristic of the Fourth Republic. The new measures were, however, only the ceremonial cutting of the e. The hard work had been done already by M. Jacques Rueff's Committee of Experts, which had urged the Government to adopt a realistic exchange rate, balance the budget and get rid of the system of 'indexation' by which wages and prices rose in an officially sponsored spiral' The best economic miracles all bring stable prices, and the French version has been no ex- ception. It clearly could not have worked if the French economy had been basically unsound. In fact the foundations for development had been laid in the years immediately after the war by the Monnet Plan, which set investment targets for six basic sectors of the economy: coal, elec- tricity, steel, cement, farm machinery and trans- port. The Monnet Plan was followed by the Hirsch Plan, which concentrated on housing, secondary industries, overseas territories and agriculture. It is interesting to notice what has happened to these two key planners: M. Monnet, after serving a term as first President of the High Authority of the European Coal and Steel Community, has since devoted his time to skilfully pulling the strings of the six- nation Communities. M. Hirsch is now President of the Commission of Euratom.
But what about the private sector; how are all those who once voted for M. Poujade taking the prospect of increased competition? The busi- ness weekly, Enterprise, which recently analysed the live hundred biggest concerns, including the State-owned Regies, arrived at three broad con- clusions: that the biggest firms, whether publicly or privately owned, were not afraid of foreign competition; that `Le Club des 500' is by no means exclusive—there is plenty of room for medium-sized firms to grow up and join it; and that French industry is in a state of flux, with new industries coming to the top all the time.
Nevertheless, big problems face French industry today. Manufacturers are reluctant to set up their factories elsewhere than around .Paris, and the small firms that clutter up the market protest loudly at the havoc that freer trade will bring. But the biggest question mark is over the future of the resources of the Sahara. The independent periodical La Nef recently devoted an issue to 'Le Sahara en Questions,' painting a marvellous picture of a Europe fuelled and powered by the oil and natural gas of the Sahara. Unfortunately for the French, this is not likely to happen, at any rate not for a long time; although oil is beginning to flow along the North African pipelines, there are awkward problems to solve before it can really become competitive with supplies from other areas— including south-west France. Libya, too, has also discovered oil much nearer the Mediterranean coast. And les visiunnaires who see a great future for Saharan oil overlook, in their. enthusiasm, the political situation in Algeria.
So, although the index of industrial produc- tion is steadily rising (168 in October, 183 in January), and the export boom is bringing down the trade deficit to manageable proportions, cer- tain faiblesses remain—notably the farmers at home, who refuse to stand by and watch their incomes fall behind industrial wages and salaries without taking action. And what of the future? How will France face up to the challenge of the Common Market? The indications on the economic front are that whether the tariff changes are speeded up under the Hallstein Plan, or simply follow their normal course, France will do very well indeed. In the Common Market the Patronat, the Employers' Confedera- tion, now sets a big opportunity. At their insis- tence every possible safeguard was written into the Rome Treaty, so that some of its other sig- natories, notably the Italians, now regard that document as an international Code Napoldon. And as a result, under the Fifth Republic. 45 million Frenchmen may very well dominate the other 140 million inhabitants of the Common Market—if they can manage to dominate Algeria first.
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