French Business Climate Gets Better As Political Climate Gets Worse…

France’s business climate indicator complied by Insee, rose to 94 in March from 91 in February. This is its best standing since August of 2008. Still it is not a good level. The climate indicator is only in the 47th percentile of its range values over the past two decades. If we place the current reading in a queue, instead of just positioning it between its highs and lows, it stands in the lower 30% of its two-decade queue of monthly values.

The momentum of the index is still strong as the Yr/Yr percentage gain reading tells us. But the level is still not at an acceptable point. At the same time President Sarkozy has implemented reforms that in these hard times are unpopular. He has lost a key regional election. On Tuesday a two-day national strike called by public sector works deals another blow to the Sarkozy government. About half the trains were running on Paris commuter lines on Tuesday morning, while nearly two-thirds of national high-speed TGV services were operating, according to a French news agency. National rail operator SNCF said services would be uneven until early on Wednesday. Teachers are protesting over job cuts and joining the demonstration, along with other public sector workers complaining about conditions at work and their lack of spending power.

Despite some sharp improvement in economic conditions the huge fiscal help offered by the government has reached its limits. Attempts to pull back and inject fiscal prudence are not being well-accepted in France.

The economic indicators say that Sarkozy’s management of the economy has helped put it on a continuing expansion. But the political airs tell us that that it is still not enough improvement for the French people who do not want and further adjustment pace on their back. France is at an impasse of sorts.

So this is the newest wrinkle in Euroland. But there is anther re-wrinkle to the ongoing Greek crisis and Germany’s opposition to giving Greece help within the zone and its opposition to Greece being helped by the IMF. It is hard to understand what the German’s have to gain by dogging a beleaguered Greece in this way. But the Greek problem, once thought to be fading to the background is now again a front line euro story and it is once again a reason for some new euro-weakness.