After mistaking your hosts for their rival country, perhaps painting a rosy picture of the Eurozone is not the best political move, especially when they find out it’s not true.
The 17-country bloc has an unemployment rate at around 12% with Greece and Spain’s jobless rate above 25%. Youth unemployment is soaring and the crisis hit zone is in its longest recession since its inception in 1999, now in six consecutive quarters of contraction.
Hollande is not the first leader to sound the horn of optimism. In May, European Commission President José Manuel Barroso said he believed the Eurozone is no longer in crisis.
But why do these European figures insist on talking up the Eurozone when economic performance shows otherwise?
To attract investment. Hollande’s comments came on a visit to Japan. The French President cited a “banking union” and better “economic governance” as reasons to suggest that the Eurozone is tightening up its regulation, making investment safer in the unstable region.
European leaders know that the economic bloc as a whole needs to improve in order to attract foreign investment to individual member states. In claiming the Eurozone is on the mend, Hollande is trying to show Shinzo Abe, the Japanese Prime Minister, that France is open for business and that the external pressures of the Eurozone will not affect investment.
But France is facing problems of its own in attracting business. The 75% tax rate on incomes over €1m is hardly incentive for top executives to settle in France.
Attacks on businesses by French politicians have not helped the cause either. In December, industrial recovery minister Arnaud Montebourg launched an attack on ArecelorMittal, saying, ““We do not want Mittal in France any longer because they do not respect France”.
ArcelorMittal CEO Lakshmi Mittal was again drawn into conflict last month with the French government saying labour costs are too high and labour laws are “too rigid”.
While Mittal is staying in France, the concerns raised by the steel tycoon show that France is not exactly “open for business”. But by claiming that the Eurozone is stabilising, Hollande is hoping to change that view.
Stability in the Eurozone is the only way member states will flag themselves up as places to invest, but if individual countries do not take the initiative and make policies aimed at attracting investment, then no amount of rhetoric can cover up this fact.