French officials like to call their economy "the locomotive of the euro zone". Although the growth estimate for this year was scaled back from 3.5 to 3.3 per cent - mainly because of high fuel costs - France is still the most prosperous of the big euro zone countries, enjoying a high balance of payments surplus and only 2 per cent inflation.
Thanks in part to the depressed euro, France is the world's fourth largest exporter. It is a pioneer in transportation with the TGV high-speed train, and a leader in aeronautics with Airbus and the Ariane rocket.
French telecommunications and civil engineering - for example the Channel Tunnel - are world class. Prime Minister Lionel Jospin is widely praised in the English-speaking world for "talking on the left" but running the economy as if he were a liberal free marketeer. Since coming to office in June 1997, Mr Jospin has sold off $30 billion (€33 billion) worth of state-owned companies.
By other criteria, France's economic recovery does not look so impressive. The US, after eight years of record expansion, still enjoys growth double that of France.
In a blow to Mr Jospin's pride, Britain this year supplanted France as the world's fourth-ranking economic power.
The French tax burden - 45.7 per cent of GDP - is one of the heaviest in Europe. The public sector is still the largest employer, accounting for one in four jobs. And French deficit spending - 1.8 per cent of GDP in 1999, 1 per cent estimated for 2000 - remains high.
Jean-Claude Trichet, the governor of the French Central Bank, as well as the European Commission and the European Central Bank, have repeatedly asked Paris to devote windfall budget surpluses to deficit reduction rather than lower taxes.
There is a strong impression at the ECB that since the departure of the former finance minister Dominique Strauss-Kahn in November 1999, the French desire to reduce deficits and public spending has weakened. This was obvious during the September 2000 fuel protests, when the Jospin government dished out Ffr3 billion (€457 million) to mollify fishermen, farmers and lorry drivers.
At 9.4 per cent, French unemployment is still among the highest in Europe. But that represents a 3.2 per cent decrease since Mr Jospin came to power in June 1997.
Mr Jospin considers the creation of 1.6 million jobs in four years to be his greatest achievement.
He talks about "full employment" within a decade, yet the structural unemployment rate in France - below which inflation would become a problem - is widely estimated at 8 per cent. Ironically, the 35-hour working week - a Jospin campaign promise that was bitterly contested by the MEDEF management federation - has benefited the French economy, mainly by keeping salaries down. In three-quarters of all cases, employees agreed to a salary freeze or limited pay rises in exchange for more time off. From MEDEF's point of view, the other victory of the 35-hour week was to introduce flexibility in the French labour market. MEDEF's mortal enemy, the former employment minister Martine Aubry, had threatened to penalise employers who overused the short-term contracts known as CDDs. The government abandoned her plan on December 14th.
In a report published by the Conseil economique d'Analyse Economique on December 5th, the economist Jean Pisani-Ferry told the Jospin government that it was no longer sufficient to stimulate domestic demand for goods and services, as the socialists have succeeded in doing. "From now on, we must concentrate on supply, that is to say on qualitatively improving the French economy - training, research, innovation, investment," Mr Pisani-Ferry wrote. He advised the government to resist growing pressure for wage increases, to be flexible in enforcing the 35-hour week, and to do away with what he called "the time bomb" of the two-tier minimum wage.
The considerable budget surpluses which first became apparent in late 1999 have created new problems for Mr Jospin, with the left demanding that the "fruits of growth" be spread around.
After cutting taxes by Ffr90 billion in 2000, the Finance Minister Laurent Fabius is offering a further Ffr120 billion tax give-back over the next three years. The most successful measure is the reduction from 20.6 to 5.5 per cent in VAT on home improvements and repairs, which gave a huge boost to the French building industry.
Until this autumn, France seemed euphoric that after 17 years of austerity the country was enjoying a recovery. But public support for fuel tax protests in September verged on civil disobedience and was a wake-up call for the government.
An opinion poll showed 64 per cent of French people were prepared to demonstrate for higher wages. Shared prosperity is not enough to keep the French satisfied.
Each citizen wants his equal portion, and although the 35hour week agreements bought Mr Jospin a few years of peace, economic growth is stoking the appetite of French employees.
