French press review 18 March 2013

5 min

The Cyprus bank deposit taxes, an Airbus deal and an impending vote of no confidence in the French prime minister, are among the big stories in today's French papers...


Business paper Les Echos has a good news, bad news front page. The bad news gets top billing, with the headline: "Cyprus in deep shock, Europe wants to tax bank deposits". That's the price of the 10 billion euro bailout package proposed by Brussels to keep the Mediterranean island afloat.

Dossier: Eurozone in crisis

The problem is that the proposed levy is nearly 10 per cent and that more than half the estimated 70 billion euros in Cypriot banks does not belong to Cypriots. Relations between the Cyprus banks and certain Russian clients are probably best described as "opaque".

Les Echos says that many economists feel that Europe's finance ministers are setting a dangerous precedent and that no one can predict the precise long-term consequences.

The good news is that the Franco-German aircraft company, Airbus, is this very morning expected to sign a deal to deliver 200 of its A320 planes to the Indonesian budget company, Lion Air. Lion Air has previously been a customer of American rival, Boeing.

Libération wonders if this is not going to be the week in which we see the emergence of a "new" French Prime Minister, as Jean-Marc Ayrault uses tomorrow's hearing of an opposition motion of no confidence, to reposition himself on the public stage.

The no confidence vote is a nonsense, called by the opposition UMP despite the fact that the Socialist government has a huge majority and will bat the motion out of the ground.

With a 31 per cent popularity rating (that's slightly better than the president), Ayrault is accused of invisibility, inefficiency and, probably, of responsibility for the recent bad weather.

He says he's waiting for tomorrow's showdown with impatience, so that he can face public opinion squarely and offer a real explanation of his actions.

Unfortunately, Jean-Marc Ayrault won't be able to do anything to change the economic growth rate, currently squelching along at a sluggish one tenth of one per cent.

He has already told his ministerial colleagues to pare their bone-thin budgets down to the marrow, and we may see further cuts before the fiscal year is out. He is certainly going to have to raise taxes. Since all the rich have fled, that means the taxman's axe will fall on the miserable middle classes, both directly and by means of increases in sales tax.

France is currently paying very little for treasury borrowings, so financing the national debt is relatively easy. However, if Italy's political deadlock and the Cypriot banking crisis combine to re-start the fire in the eurozone, long-term borrowings are suddenly going to become very expensive and Jean-Marc Ayrault will be on his way down the gurgler, with the rest of us in his wake.

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