The one that was inaugurated by President Sarkozy’s June speech to Congress and by the subsequent Government reshuffle is not a new stage of the legislature, except in the chronological sense.

It may be tempting to see the promises of reform contained in the speech as the start of a more incisive action. This expectation may be supported by the outcome of the European elections. These not only strengthened the primacy of the UMP majority party, but also humiliated Sarkozy’s three principal or would-be rivals, the Socialists, the centrist Modem, and the National Front.

In reality, not only was the victory less shining than it may appear – achieved in the context of record low turnout, and a sign of opposition inanity rather than majority skills. Also, the majority was able to hold its positions by a large dose of policy prudence and not a few tactical withdrawals. The lesson of the June elections is not that the majority can now launch into daring reforms; it is that it pays to be moderate.

It is a lesson that will not be ignored as the legislature approaches mid-term, and which had some applications in the extraordinary July session of Parliament – when the majority almost allowed the Sunday work bill to fail and postponed approval of the controversial second bill on illicit downloading.

In all likelihood, the second half of the Sarkozy President will be similar to the first, a full and lively agenda, but only incremental change.

Admittedly, there is an issue on which a policy turn is possible, fiscal policy. In his speech Sarkozy contrasted the ‘bad’ deficit with the ‘temporary’ and ‘good’ deficits. The first is the deficit on ordinary accounts. The second is the cyclical one, linked to the recession. The so called ‘good deficit’ would be the one used to finance France’s investment in the future. Two former Prime Minister have been appointed to identify possible targets for such investments. A national loan will be launched in 2010 to finance the project.

This is a worrying development. Not only does it make a unilateral breach in the Maastricht criteria, it also opens the Pandora Box of fiscal discretionarily. It must be hoped that this issue too will be ultimately addressed in a sarkoziste fashion, with much fanfare but a limited actual commitment of resources.

© 2009 Europrospects Ltd.