François Hollande has promised to unveil measures this week to fire up France’s flatlining economy, including moves to reverse an alarming slide in the all-important construction business, reports The Financial Times.
The sector’s woes, marked by a steep fall in housing starts this year, are emblematic of the troubles besetting Mr Hollande’s presidency.
Just as his business critics scold him for spending his first 18 months in office raising taxes, damaging business before he reversed course this year, they are now complaining that a new law regulating the housing market enacted by his socialist government has exacerbated the construction recession.
“You cannot say the law caused the crisis,” says Jacques Chanut, head of FFB, the French building federation. “But it is an additional psychological element. The more you regulate, the more you block the market.”
The voluminous law, which among other elements introduced new protections for tenants and added to paperwork linked to property sales, was overseen by Cécile Duflot, a Green party minister who quit the government earlier this year.
Last week she published a book heavily criticising Mr Hollande (“he passes his time setting goals he cannot meet”) and Manuel Valls, his reformist prime minister, for abandoning a leftwing agenda.
“The core of France’s too-feeble growth is what is happening in the housing sector,” Michel Sapin, finance minister, said earlier this month.
Ms Duflot insists her law is not to blame for the housing crisis. But the government, alarmed by the negative reaction of property investors, is now moving to unstitch its effects. It is set to exempt the Paris region – where a housing shortage is most acute – from some of the new regulations.
Mr Hollande has also promised a “relaunch plan” for the sector, covering tax, regulation and finance.
The need for action is urgent. The building sector – excluding infrastructure projects – accounts for 8 per cent of national output, employing almost 1.2m people.
But after recovering to near 400,000 after the financial crisis, annual housing starts collapsed to 330,000 last year and are set to slump to 300,000 or below this year – a far cry from Mr Hollande’s election pledge to raise the figure to 500,000.
Read more of this report from The Financial Times.