If you are in France you might be aware that M Sarkozy is having a much publicized TV interview this evening (5/2/09) where he will answer many of the concerns of the ‘man in the street’ about the current economic woes. Here is one I hope gets tackled…

• Would Joe Public be more likely to buy a Renault if it cost 20,000 euros and was made in France or cost 14,000 euros and came from Poland, assuming the same standards of production were maintained in both places?

The French government is planning to give billions of euros to the French car companies, on the condition that they keep jobs and manufacturing plants in France. The EU antitrust bodies think it’s a bad idea, and contravenes the European rules on free trade.

The real problem is that cars in France are just too expensive. I checked prices for a couple of identical models of new car between France and the UK and they were about 20-25% cheaper in the UK (due to both exchange rates and more competition to sell vehicles). We already know of a few expats who are planning to pop back to England for their next car (left hand drive models are available, apparently).

Here’s another question…

• if a pair of jeans costs 100 euros in France and the exact same pair in the UK cost 50 euros, which would you prefer to pay for

The same applies to other shopping as well – France has become too expensive for French people to afford! We know of families, both English and French, who have taken to hopping on a plane from Bergerac to the UK to buy their clothes trather than buy them in France.

High business taxes have pushed prices up, high personal taxes mean people don’t have much cash left over to spend – net result: the big concern in France, and the one that is causing many of the current strikes in the country, the falling “pouvoir d’achat” – i.e. the French are feeling poorer.

Sooner or later people get angry if they are working very hard and still feel poor, while they see billions of dollars given to the bankers. When people in France get angry they go on strike. Hence the current strikes hitting France.

The current strikers are asking for lower VAT rates and higher minimum wages, and more support for PME’s (small and medium sized companies) among other things. On this occasion I’m with the man in the street, in spirit if not in practice, and very possibly for different reasons. It would be better to spread the cash around in reduced taxes and let us all decide how to spend it ourselves.

Of course, if the French government took this approach they would need to keep their fingers crossed that Ryanair don’t have 50,000,000 seats available on the next flight out of France, or the entire population of France might turn up at an out of town hypermarket near Stansted.