At every opportunity, President Sarkozy has repeated the message that the next eighteen months will be a time of intense reforms. The Presidential and Parliamentary elections are due in the spring of 2012, and it is generally assumed that as polling days loom closer Governments become more circumspect and less active. Reforming may be good for the medium and long term but it always threatens to create more discontents than supporters in the short term. Sarkozy wants to follow a different approach and in the process send out his old message that he is no ordinary politician.

No doubt the President will be able to announce a multiplicity of initiatives and to frequently seek to stand out as a rare politician, who focuses on what the country needs rather than on what the polls seem to advise.

There is, however, a conflict between wishing to make incisive reforms and the lack of money to finance them. Having recently reappointed François Fillon as Prime Minister of a Government which keeps Christine Lagarde at the Treasury, Sarkozy has bowed to the imperative of fiscal austerity. He had no alternative after the defeat of Labour in the UK had deprived him of the only large ally he could have had in pursuing a reflationary policy, and after the financial markets served their intimations against those who stray too far from the path traced by Germany.

The contrast between reforming ambitious and lack of funds is clear in the two main projects planned for this year, tax reform and nursing care. The tax reform will be of limited scope, confining itself to a trade-off between wealth tax and fiscal shield rules. As for nursing care, few would doubt of the need to address the problem. But the solution will certainly not be the creation of new component of the Social Security. Like the rest of the public sector, the Social Security is beset by tight finances, and a general rise in contributions is out of the question.

With no new money to back up promises and an electorate that has become disenchanted with Sarkozy’s self presentation, the prospect for a centre-right victory next year will have to rely mostly on an economic upturn. If by the spring of 2012 the economy is growing faster, unemployment is clearly falling and consumer confidence has recovered, a majority of the electorate may conclude that Sarkozy (assuming that he stands again) and his allies are the safest bet. But at the moment this does not look the likeliest scenario, not least in view of the rising popularity of the Socialist opposition.

© 2011 Europrospects Ltd.