Elections could awaken sleeping giant France

Fresh political impetus borne out of the forthcoming result of the French presidential campaign could reignite the nation’s “entrepreneurial spirit” and offer good opportunities for investors.

That is according to James Macmillan, head of European equities at BlackRock Merrill Lynch Investment Managers (MLIM).

Macmillan says presently the country places a huge burden on employers through excessive Government spending, but suggests this could change when a presidential candidate is selected.

Election frontrunners Conservative Nicolas Sarkozy and Socialist Segolene Royal are in the latter stages of their campaigns.

“If the forthcoming elections produce fresh political impetus to restructure and unload some of the employers' burdens it will set free [the French] entrepreneurial spirit,” Macmillan says.

“This will allow smaller and mid-sized companies and the economy as a whole to match the performance of France's world class companies that are prospering on the world stage.”

Macmillan says despite some poor economic decision making in France, the economy still has a strong base.

“It's true France has become addicted to government spending and onerous employment practices which are a burden on employers and a brake on economic growth,” he says, “and compared to the UK and US growth looks pedestrian.

“But underneath this the French economy is in reasonable health and is very much a world leader in important sectors, including aerospace, tourism, food manufacturing, luxury goods and nuclear power.

Presidential candidates Sarkozy and Royal are set to hold their final rallies this evening.

After going head to head in a TV debate yesterday, an opinion poll out today suggests 53% of voters found Mr Sarkozy more convincing than Ms Royal who scored 31%.

They are currently vying for votes from the 18% of voters who backed Mr Bayrou - who came third in the first round held on 22 April - as well as those who supported far-right nationalist Jean-Marie Le Pen.

Mr Sarkozy won 31.2% of the votes and Ms Royal won 25.9% in the first round of the election.

If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Scott Sinclair on 020 7034 2636 or email scott.sinclair@incisivemedia.com