The French election has lessons for us in Jersey

So what does President Hollande mean for Jersey? If we take our usual insular stance, the answer would have to be ‘not very much’.

After all, how can someone sitting in Paris, with the responsibilities of a huge country like France to worry about, affect us sitting on a rock in the English Channel? Before the invention of the telephone, the internet, jet fighters and globalisation, the answer might well have been not very much.

These days, however, whoever sits in the Elysée Palace can have a great impact on Jersey.

The first worry is what he thinks about tax havens. Some Islanders might naively believe that his views on tax havens don’t matter, because we are not a tax haven. Indeed, it would be relatively easy to put up a detailed and substantial case in support of our position as a transparent and co-operative low-tax jurisdiction as opposed to a grubby little tax haven.

Unfortunately, that argument may not have been made to President Hollande yet, and he probably currently believes that we are a grubby little tax haven.

What’s perhaps even worse is that he probably thinks we are a grubby little tax haven on the edge of France and with significant ties with what to some Islanders might still be considered the Mother Country. In which case, the sooner someone enlightens him, the better.

Of course, you don’t become President of France by being silly, so he probably accepts that there are some nuances between what Jersey is and what a tax haven does. But it would be surprising if he were any better informed than the leaders of the various political parties in Britain, who also sometimes struggle to see the difference between Jersey and a tax haven. If they can’t see it, how can you expect President Hollande to do so?

So the Island has some work to do to ensure that the new French President and his advisers are fully aware of our commitment to the highest international standards, particularly in financial affairs.

We shouldn’t leave this too late, either, because although M Hollande will no doubt be busy trying to sort out the French and the European economy, he also appears keen to put more concerted pressure on tax havens.

In an interview with Slate magazine this week, M Hollande said that Britain had been ‘particularly shy on the issue of financial regulation and has only paid attention to the interests of the City of London’.

Hence the UK’s reluctance to implement a tax on financial transactions and tax harmonisation in Europe, he added.

But when asked about his ambitions to emulate Nicolas Sarkozy as a European leader, M Hollande replied that the French leader ‘is not just an ordinary leader in the world’ and ‘sometimes directing or leading the way is not enough; he has to initiate policies’.

‘Yes, I do intend to give France its place in the affirmation of an international ambition,’ he said. ‘What was missing in dealing with the financial crisis was consistency and perseverance, particularly the control of the financial world, the fight against tax havens, and the European Union financial transaction tax.’

We have been warned.

ONE other interesting aspect of the French election which is pertinent to Jersey is that the victory of M Hollande is being seen as a victory for one side in the great debate about sorting out Europe’s economic problems. M Hollande’s election has been viewed as a victory for those who believe economic growth is the answer, as opposed to those who believe that austerity is the key.

Indeed, the new French President has been made to look as though he thinks the only thing necessary is economic growth and that there’s no place for austerity. But it’s as naive to make that argument as it is to make the argument that only austerity is required to solve our economic problems.

I say ‘our’ problems because there has been a similar debate in Jersey between those who believe the Island needs most of all to cut the deficit and lower spending, and those who believe that going all out for economic growth is the better way.

This is also a pretty naive argument in both the European and the Island context. Our economic problems require a slightly more nuanced approach: it’s not as simple as choosing one extreme or the other.

What the election of M Hollande has highlighted is that many people believe that the austerity argument has gone too far, and that austerity has become almost a target, not a tool.

The same cannot be said in Jersey, because we are nowhere near introducing any serious amounts of austerity. That’s because Jersey’s problems are nowhere near serious enough to justify putting Islanders through the same pain that the Greeks, for example, are having to go through.

The criticism I have always had is that the States made our problems look so serious that austerity measures might well be a justified response. My view was that a modest amount of economic growth could make a huge difference, but early on in the debate, economic growth was hardly mentioned. Now it’s on everyone’s lips, but perhaps not quickly enough to avoid damaging confidence and causing an upheaval in public services.

So perhaps the election of M Hollande could be viewed as a victory for those who believe economic growth is the answer. However, I’m pretty sure he believes that the solution is really more complex.

As a journalist I have always been told to avoid clichés like the plague, but in this case I can only describe what is needed in Europe, as in Jersey, as a balance.

A little austerity and a lot of economic growth could be the right balance.

Peter Body is editor of Business Brief magazine