What is at stake in the French election

“La France compte 65 millions de sujets, sans compter les sujets de mécontentement”. From a political standpoint, the famous sentence by 19th century polemicist Henri Rochefort applies perfectly: French voters are angry and politicians are struggling to respond to their anger. But from a market perspective, there are only three serious topics: first, public finances; second, competitiveness; and third, the country’s stance in Europe. The question is whether the next president will have the ability to tackle them without exacerbating the citizens’ anger.

Start with public finances. The numbers are bad though not exceedingly alarming, but the record of the past decades is weak: the country has repeatedly refrained from seriously attempting to reduce public debt; it combines a Nordic appetite for public spending with a Southern European willingness to pay for it;  and fiscal credibility is low.

Plans to change this state of affairs have not been seriously discussed during the campaign, but François Hollande and Nicolas Sarkozy have both pledged to reduce the deficit to zero by the end of their term. Whoever gets elected will thus be able to claim that he has been given a mandate to break with sloppiness. He may be able to change course if he sets the compass right from the outset, especially by devising a fiscal rule and by creating an independent monitoring body.

Competitiveness is more difficult. Over the last 10 years the current account balance has worsened  year after year, the share of manufacturing in output has shrank, the number of exporting firms has diminished and the share of exports in GDP has stagnated. France has a number of world-class companies but its medium-sized companies are too few an, the insufficiently profitable. They too often compete on prices rather than quality.  The disease is thus severe.

The campaign here has been less helpful. True, the two main candidates have acknowledged the problem and both have said priority will be given to supply-side measures. But there has been no comprehensive policy conversation about these and the candidates have pandered to the anti-profits, anti-offshoring, anti-globalisation mood of the electorate. So the next president will not have a clear mandate for politically and socially sensitive reforms.

As to Europe, it is increasingly evident that the bare-bones Economic and Monetary Union of the Maastricht treaty is a casualty of this crisis. A stable euro requires significantly more policy integration. There are discussions about what exactly is needed – a banking union, eurozone bonds or a fully-fledged fiscal union with transfer mechanisms – but all require giving additional powers and political legitimacy to Brussels.

As the country that first proposed the euro and because its economy heavily depends on European prosperity, France should be the champion of these reforms. It is also pivotal as Germany cannot move if it perceives France as double-minded. But both left and right include a strong and vocal eurosceptic wing. For this reason candidates have refrained from spelling out a genuine European programme. The next president, however, will have little time to let his true priorities known and hold serious discussions with Berlin and other partners before the German election campaign starts, de facto suspending negotiations.

In the end the next president will be short of the mandate he should gain in the campaign: the election will have delivered barely enough on public finances, little on competitiveness and almost nothing on Europe. For sure, the French system is centralised enough to give the president the means to push through the agenda he believes in. But this, perhaps, is also the reason why Rochefort is still right, a century and a half later his famous editorial.

*A version of this column was also published in the Financial Times.