In the month of August, France goes on holiday.
GV Cars on autoroute outside Paris.
GV & SVs Empty streets in Paris and closed shops. (4 SHOTS)
SVs Passengers with baggage at Charles de Gaulle airport. (3 SHOTS)
GV & SVs Parisian holidaymakers at railway station.
SV Train leaving station.
Background: In the month of August, France goes on holiday. Regardless of the problems which worry them for the other eleven months of the year, millions of Frenchmen head for the sun at this time. Nonetheless, the economic situation they leave behind is serious. The 15 months of Francois Mitterrand's government have seen two devaluations of the franc and the onset of a recession which France had so far escaped.
SYNOPSIS: The French ritual of the August holiday got under way over the last weekend in July. Risking traffic jams and fearful road accidents, millions of Frenchmen poured like lemmings onto the roads, went by sea or took to the air -- leaving behind empty cities, closed business and shuttered shops. But as they headed for the sun, they left behind a serious national economic problem. Unemployment, a balance of trade deficit and bankruptcies all reached record levels in June. Two devaluations of the Franc have undermined national morale, and inflation still runs at more than 13 per cent. Although the French are among the highest paid workers in Europe, and their purchasing power has been maintained by wage increases, great numbers face an uncertain future.
While France got away from it all for a month, the government was warning that the recession would bite hard for al least the next year.
Francois Mitterrand came to power in May, 1981, on a wave of euphoria. After being out of office for 22 years, Mitterrand's Socialist Party returned to power promising to nationalise the major industrial groups and the banks, and to cut the working week. But the government seriously misjudged the economic situation. Defending the franc on the international money market drained national reserves. Nationalisation cost huge amounts of money, and the attempt to create employment by cutting the working week was a flop.
In contrast to the noisy approval which greeted President Mitterrand's election, he now presides over a nation racked with industrial unrest and a wave of strikes supporting demands for more wage rises.
While French exporters have failed to capitalise on the devaluations of the franc, the resultant increase in the price of imports has hit France hard, particularly since France depends on imported oil. Nonetheless, imports have risen and have hit the French car industry badly. One in three cars sold in France is now an import, compared with one in four last year. At the same time, strikes at the Citroen and Renault factories have cut production by well over 80,000 vehicles.
Economic recession such as that felt throughout the rest of the industrialised world has been hardly felt in France. High wages and the world's most generous family welfare benefits have enabled the French to maintain a high standard of living. The Minister of Finance recently reminded France that the rest of the world had been suffering recession for more than two years, reminding Frenchmen that austerity now is the only prospect for renewed prosperity later. and while figures like 43 billion francs balance of trade deficit mean little to the ordinary citizen, they have been jolted by rising prices and unemployment above two million.
The cost of providing two million unemployed with the high social benefits paid in France will be close to two billion dollars for the last half of this year alone. The chances of reducing unemployment are smaller as the shorter working week and higher wages brought 2,000 company bankruptcies in June alone.
In August, everything stops in France -- except the traffic. But when the nation returns from its annual sunshine spree at the end of the month, it will be to an unpleasantly chilly economic climate, and the forecast is that it will remain unsettled for some time.