Bad news for Hollande as austerity bites

Hollande's focus on cutting deficits with revenues hasn't saved him from the downsides.

The French economy is on the rocks, in a move which threatens to derail president Hollande's economic reforms. The Observer's Kim Willsher reports:

The French leader has been hit by soaring unemployment figures, further factory closures and job losses, and plummeting popularity on top of growing fears that he and his Socialist government are failing to address the country's problems. Members of the opposition right-of-centre UMP have accused them of being "amateurs".

The news is bad, both for Hollande, and for proponents of revenue-side austerity. It is probably too soon to write-off the effects of the controversial 70 per cent tax rate – the pernicious effects of which are supposedly flight of high-net-worth individuals, rather than just a retardation of growth per se – but at the same time, it is clear that Hollande's agenda is, at best, no better than Sarkozy's was.

Despite the unpopularity of those revenue-raising measures amongst the economic elite, a meeting with members of various international organisations today – including the IMF and OECD – will reportedly focus on supply-side reforms "to improve France's competitiveness on the world market and restore confidence at home and abroad". The French labour market, with its ring-fenced working hours, worker protections, and strong unions, is frequently seen as being counter-productive to economic health.

The other major reason why the OECD and IMF are unlikely to press too hard on the question of high marginal tax rates is that, despite the fact that it has led to Hollande's government being seen as a standard-bearer for the left, they still fit very strongly into the narrative of "austerity".

The socialist government has made much the same pledges to be "realistic about the deficit" and practice "fiscal restraint" as we are used to hearing from all the parties in the UK. Where it has differed is in the method by which it has tried to reduce the deficit, focusing on increasing revenue rather than decreasing spending.

While this has driven some economists, like GWU's Veronique de Rugy, mad, it is a perfectly fair application of the principles behind austerity. What it also does, though, is expose the contradictions between those who genuinely desire to reduce deficits, pay down debt and "win the confidence of bond markets", and those who have used those as a convenient excuse to argue for shrinking the state.

Whether-or-not revenue-based austerity is as effective as spending-based austerity, however, it is clear that both are austerity. To those who have argued that, in a recession characterised by depressed consumer confidence and low aggregate demand, the state needs to temporarily push for deficit-funded spending, the bad economic news for France is yet more evidence in favour.

François Hollande. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The Land Registry sale puts a quick buck before common sense

Without a publicly-owned Land Registry, property scandals would be much harder to uncover.

Britain’s family silver is all but gone. Sale after sale since the 1970s has stripped the cupboards bare: our only assets remaining are those either deemed to be worth next to nothing, or significantly contribute to the Treasury’s coffers.

A perfect example of the latter is the Land Registry, which ensures we’re able to seamlessly buy and sell property.

This week we learned that London’s St Georges Wharf tower is both underoccupied and largely owned offshore  - an embodiment of the UK’s current housing crisis. Without a publicly-owned Land Registry, this sort of scandal would be much harder to uncover.

On top of its vital public function, it makes the Treasury money: a not-insignificant £36.7m profit in 2014/15.

And yet the government is trying to push through the sale of this valuable asset, closing a consultation on its proposal this week.

As recently as 2014 its sale was blocked by then business secretary Vince Cable. But this time Sajid Javid’s support for private markets means any opposition must come from elsewhere.

And luckily it has: a petition has gathered over 300,000 signatures online and a number of organisations have come out publically against the sale. Voices from the Competition and Markets Authority to the Law Society, as well as unions, We Own It, and my organisation the New Economics Foundation are all united.

What’s united us? A strong and clear case that the sale of the Land Registry makes no sense.

It makes a steady profit and has large cash reserves. It has a dedicated workforce that are modernising the organisation and becoming more efficient, cutting fees by 50 per cent while still delivering a healthy profit. It’s already made efforts to make more data publically available and digitize the physical titles.

Selling it would make a quick buck. But our latest report for We Own It showed that the government would be losing money in just 25 years, based on professional valuations and analysis of past profitability.

And this privatisation is different to past ones, such as British Airways or Telecoms giants BT and Cable and Wireless. Using the Land Registry is not like using a normal service: you can’t choose which Land Registry to use, you use the one and only and pay the list price every time that any title to a property is transacted.

So the Land Registry is a natural monopoly and, as goes the Competition and Market Authority’s main argument, these kinds of services should be publically owned. Handing a monopoly over to a private company in search of profit risks harming consumers – the new owners may simply charge a higher price for the service, or in this case put the data, the Land Registry’s most valuable asset, behind a paywall.

The Law Society says that the Land Registry plays a central role in ensuring property rights in England and Wales, and so we need to ensure that it maintains its integrity and is free from any conflict of interest.

Recent surveys have shown that levels of satisfaction with the service are extremely high. But many of the professional bodies representing those who rely on it, such as the Law Society and estate agents, are extremely sceptical as to whether this trust could be maintained if the institution is sold off.

A sale would be symbolic of the ideological nature of the proposal. Looked at from every angle the sale makes no sense – unless you believe that the state shouldn’t own anything. Seen through this prism and the eyes of those in the Treasury, all the Land Registry amounts to is £1bn that could be used to help close the £72bn deficit before the next election.

In reality it’s worth so much more. It should stay free, open and publically owned.

Duncan McCann is a researcher at the New Economics Foundation