France, it seems, is having a reasonably good recession. As its President bestrides the international political scene like a miniaturised colossus, the prediction is that its GDP may shrink in 2009 by a mere 3% - a far better performance than its fellow economic Euro powerhouse Germany, and its old enemy the UK. There was even an unexpected surge of 2.6% in industrial output in May.
But Paris was curiously quiet in the sweltering heat of July, as the Tour de France got under way in the run-up to Bastille Day. The lunchtime queues to hail the scarce taxis on the Champs-Élysées were shorter than most locals could remember. The usual rush of tourists buying late night Berthillon ice creams from the cafés on the Ile de la Cité near Notre Dame, at a euro or so a scoop, was no more than a trickle.
As for the flesh-pots around The Pigalle, when were restaurants last so quiet? A low-spending posse of European and North American insolvency judges were greeted like long-lost friends, their inability to wrap their tongues round the names of classic French dishes forgiven for once by anxious restaurateurs, rather than treated with the usual Gallic disdain.
In the business world there is a weary acknowledgement of the phenomenon seen all over the developed world. Restructuring professionals complain bitterly that there are decent French companies in need of turnaround, but where is the funding to make this possible? The revolutionary new French rescue procedure, Sauveguard, hailed so recently as the saviour of Eurotunnel, is lying largely unused and undeveloped.
The extraordinary business valuation skills of such revered investment houses as the French branches of Rothschild and Lazard are being tested as never before. There are many opportunities but few buyers - or even comparative transactions to validate theoretical pricing of deals. Commercial lawyers are quiet because investment and expansion is on hold across the board. Needless to say, their colleagues specializing in the devastated property sector are in even worse shape, wondering where the next instruction will come from.
And it’s not just in France’s charismatic capital where things are bleaker than they look from the outside. An English fine arts tour guide was overheard complaining of her travails in Annecy, close to the wealth-sheltering safety of Switzerland. The bad news, she told her lunch companions, was that her husband’s flat remained unsold after a year, without even a viewing in over six months. The good news was that some local house decorators had knocked on the door, offering a 60% discount to the normal price for painting the outside of their property.
So France goes on suffering, despite the much proclaimed success of its government in steering a typically dirigiste path through the troubled waters of the recession. Like the rest of Europe and most of the rest of the world, no real end is in sight.
This is the latest missive from the travels of our some-time correspondent Nick Hood, a partner at UK insolvency firm Begbies Traynor.
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