PARIS (AP) — The man charged with reviving France’s shrinking economy and attracting businesses to invest here is gaining a reputation for doing the opposite.
As the country’s first-ever minister for industrial renewal, Arnaud Montebourg has told the world’s largest steelmaker it is not welcome in France; exchanged angry letters with the head of an American tire company he was supposedly wooing; and scuttled Yahoo’s offer to buy the majority of a video-sharing website.
Montebourg, a 50-year-old lawyer from Burgundy, is the public face of President Francois Hollande’s plan to revitalize Europe’s second-largest economy, which is in recession and grappling with 11 percent unemployment.
Economists have praised the labor reforms as a step in the right direction. But mostly they say France’s economic plan is all wrong: it is too complicated; it favors a top-down approach to innovation; and it ignores some of the most serious problems plaguing France’s economy, such as high labor costs.
And then there is Montebourg, whose public spats with international companies and efforts to block layoffs are making France look like an unappealing place to do business.
In fairness to Montebourg, he’s not so much the problem as he is the symbol of it, analysts say. Even if Hollande were to replace him — and that’s looking increasingly likely — it’s unclear whether the substance of the industrial renewal strategy would change.
The sheer size of France’s economy has cushioned it somewhat from the worst of Europe’s debt crisis, which has brought depression-level unemployment to countries like Spain and Greece. It is home to many huge industrial companies, like EADS, parent company to plane-maker Airbus; Total, the world’s fifth-largest investor-owned oil company; and Sanofi, the world’s fourth-largest pharmaceutical company. France is also a cradle for design, high fashion and fine wine, embodied by world leaders like LVMH and L’Oreal.
But make no mistake, analysts warn: The French economy, which had no growth in 2012 and shrank at an annualized rate of 0.8 percent in the first three months of 2013, is in slow-motion free fall.
Profit margins at French companies are the lowest they have been in 30 years.