France still isn't working

When the new French prime minister, Alain Juppe, stood before the National Assembly on Tuesday, and again before the Senate yesterday, to present the policies that inaugurate Jacques Chirac's presidency, expectations were high in France and abroad. If anyone could square the circle of delivering more jobs while keeping France's high public deficit under control, it had to be this "Ferrari brain" promoted from the Foreign Ministry.

Philosophically, too, it was expected - perhaps misguidedly - that a right-of-centre government, as Mr Chirac's professes to be, would have as much interest in keeping spending down and the franc up, as in possibly taking risks with inflation in the cause of tackling France's chronic unemployment problem.

Mr Juppe's failure to give any information at all about how he might pay for the new jobs he wants to create caused disappointment all round. Ironically, it was left to Socialist MPs to point out the missing costings. There seemed to be a strange reversal of roles: a government of the right proposing a generous, even lavish, job creation package, and a left-wing opposition asking how it was to be paid for.

While the disappointment of the markets was understandable, however, the expectation from which it stemmed were largely wrong.

Jacques Chirac was elected not for any pledge to keep the deficit down or the franc up, but for his commitment to healing France's perceived "social fractures". Nor is he a right-wing politician pure and simple (though his Finance Minister, Alain Madelin, may be); he sees himself as a one-nation Gaullist.

When pressed about the cost of job creation during his campaign, Mr Chirac offered a familiar justification of what he proposed to do, saying that the average annual F120,000 (pounds 15,000) cost of keeping someone out of work would be better spent giving them work to do and helping them into a tax bracket. About that, the markets were right to be sceptical then as they are now.

But there was another mistake, too. The measures announced this week were only half the package. The other half, a mini-budget (which could turn out to be a maxi-budget, thoroughly revising allocations and tax rates set at the end of last year) is planned for late June. And why wait until late June, when the markets are biting their nails about the jobs package?

Because in mid-June there are municipal elections, and if the right loses large councils to the newly confident Socialists, its power - despite a large majority in parliament - will be circumscribed. Mr Juppe is not just a Ferrari brain; he has political nous as well, all of which may suggest that the hard franc will probably continue to face some hard pressure.