12 November 2003

EZA 567 France-Politics

French government reshuffle likely soon; Raffarin, reforms to stay
The deep unpopularity of French Prime Minister Jean-Pierre Raffarin’s government is near certain to cause President Jacques Chirac to reshuffle ministers soon. One victim could be Finance Minister Francis Mer, but both Raffarin and the moderate reform course are likely to remain in place. Raffarin's popular support has dropped to 33% - sparked by the unpopular spring 2003 pension reform and the catastrophic management of the heat wave in Aug03, with several thousands of undue deaths among elderly people. Now the budgetary line for 2004 remains unclear, the junior coalition party UDF is unhelpful, and several ministers including number three in government François Fillon have recently resisted government discipline. Stopping the reforms however would remind many centre-right voters of the zig-zag path of the last right-wing government under Alain Juppé in 1996, which they punished at the polls of spring 1997. As well, reform deceleration is a luxury France can no longer afford; the health insurance system is nearly bankrupt. The economy may also recover soon and start to create jobs - which Raffarin can use to accelerate reforms later.

SummaryAsset Conclusions: French government instability, reshuffle may cause CAC-40 underperformance but reform course, Raffarin likely to stay in place

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© Graham Bishop