The publication of the French economy figures for 2016, even if some are provisional, permits to draw up an evaluation of the economic policy followed during the last five years and to compare its results with the initial objectives. Its purpose, through a supply-side oriented policy was to increase enterprises profit margins to give them the possibility to put the French economy back on a sufficient growth path to reduce unemployment. In the same time, the government had to rebalance public finance to comply with European criteria. François Hollande had announced he will fulfill commitments inscribed in the European budget Treaty he found when he was elected and, at the end in his mandate, that French public accounts will be balanced. This objective has been quickly removed and replaced by the promise to come back to a deficit inferior to 3% of French GDP. To say in his defense, when he came into power, public deficit had reached 4.8%, slightly less than the previous year, in 2011, when it was 5.1%.

The situation found in 2012 doesn’t explain the failure of the policy adopted after. The French economy has never endured, after, such a long period of stagnation. Growth was only 0.2% in 2012, 0.7% in 2013, 0.2% again in 2014, 1.2% in 2015 and, at last, 1.1% only in 2016. The average annual growth rate during these five years was about 0.6%. Each time, the initial objective set at the beginning of the year, had to be revised down. These results are especially mediocre since the international environment, during that period, became favorable. During 2014 autumn, oil price fell, which reduced the energy bill and should have sustained purchasing power and production in reducing its costs. The euro, against the dollar, came back to a level unknown since 15 years. If its fall, welcomed by some, has partly neutralized the positive impact of the reduction of energy prices, it should have supported exports and, as a consequence, growth. It didn’t happen. At last, the expansionist monetary policy of the ECB, has provoked a fall of interest rates, favorable to enterprises investments because it reduced their financial charges; once more, nothing happened. The positive impact on households appeared only in 2016 with a significant rebound of housing and a revival of the real estate market. But the growth of this sector generated less jobs than in the past, due to the hiring of detached workers.

During that period of time, France has been the back-marker among eurozone countries. If unemployment started to stabilize in 2016 and even, at the end of the year, initiated a decline whose lasting trend is still to be confirmed, during these five years, there were 520 000 more people who did not have any activity, who were looking for jobs. The State didn’t skimp on money to reduce charges weighting on enterprises and to incite them to invest and to hire. The various measures which were adopted, generated a spectacular reduction of the corporate income tax. Its receipts fell from 47 billion euro in 2013 to less than 30 billion in 2016. Cumulated over four years, the diminution reached 43 billion. But, to fulfill with European criteria, these tax reductions had to be compensated by an increase of taxes levied on households. Income tax receipts rose from 60 billion euro in 2012 to 71.7 billion in 2016. Energy consumption taxes increased by 2.2 billion between 2012 and 2016 and  V.A.T. receipts rose during the same period by 11.5 billion euro, which lead to a situation where total transferred taxation from corporate to households has exceeded 20 billion euro, in 2016, at the end of the five-year term. But that was not enough to comply with the public deficits objectives. That year, it was still over 3% and, after five years, the reduction of the deficit to GDP ratio was only 1.5%. 2017 forecasts with a 2.7% deficit ratio, according to official documents, have been considered as not much credible by the Cour des Comptes. The number is also theoretical: a new government will come into function in June and, according to proposals announced by candidates at the presidential election, it is highly unlikely that the timid effort to reduce public deficits, accomplished since 2012, will be increased or even maintained by the political majority which will come out of the ballot.

A too weak growth, unemployment on the rise and an insufficient reduction of public deficits, here are the results at the end of that five years term. The cause is simple: the huge resources transferred to improve the enterprises margins did not generate any return to growth, on the opposite of the analysis developed when it was decided. New financial resources were a little or not at all, according to the different activities, affected to investment or jobs creation. The supposed increased competitiveness did not generated an improvement of their capacity to export, unlike our neighbors, Germany, of course, but also Italy, Spain and even Switzerland, which has what we would qualify as an overvalued currency and much higher wages costs. France trade deficit, excluding energy, increased every year during these five years, which brings the proof that the remedies, imagined at that time, were not the right ones. At the end, none of the objectives targeted by the successive governments were hit and France still run an excessive public deficit.

The causes of this spectacular failure, which is the main if not the only reason why François Hollande decided not to run for a second mandate, because he has not to turn red about the other parts of his action, notably France foreign commitments or resistance to terrorist attacks, is the major mistake made as soon as 2012: to believe that in blindly reducing charges weighting on companies, and, in the same time, in increasing taxation on households to fulfill European commitments, he could put back France on a growth path. It is exactly the opposite which occurred. The reason is simple. Supply-side policies work when they include targets and in a growth environment. In a stagnant environment, made worse by the fiscal shock inflicted to consumers, these policies don’t generate rebounds and contribute, as a consequence, to increase the profits distributed to shareholders. Regarding just listed companies in the CAC 40 index, they rose from 41 billion in 2012 to 55.7 billion euro in 2016, including share buybacks. 2017 numbers should even be higher. As, in the same time, taxation has dissuaded French residents to own shares, foreign shareholders, whose weight has increased, have been the main benefactors. It occurs, sometimes, that public policies reach a result which is the opposite of the one which was targeted. At this level, it is unique and the François Hollande five-year term will figure as a textbook case for economic policy mistakes. But the most surprising is that the one who inspired that policy, who has been during two years in charge of putting it into practice, is candidate to his succession and proposes to go on with that policy, without arousing even any question.