In the French Presidential election campaign of 2012 François Hollande flew against the wind of austerity. He promised to boost state spending EUR 20 Billion by 2017, create 60,000 teaching posts and 150,000 subsidised jobs for young people. This would be paid for by new taxes for the wealthy, financial transactions, bank profits, caps on bonuses, a ban on stock options and the trading of "toxic" financial instruments.
The aspiration was that by the end of a first five-year term in the Elysée Palace, Hollande would bring France's budget deficit back to 3 percent of GDP as the economy grew and the gloom of austerity was replaced by expansion. This has not happened and business sentiment has soured since his election. 
Source: Eurostat
Source: INSEE
This presents a genuine dilemma for the European Commission as it must either bare its teeth at the Eurozone’s second largest economy or risk being seen to wilt as soon as troubles presents itself. The irony is that the new Commissioner for Economic and Financial Affairs, Taxation and Customs is Pierre Moscovici, who was the France's Finance Minister before Mr Sapin. Moscovici failed to deliver a budget that complied with EU requirements during his period in the French government and so it is amusing to outsiders to see him suddenly follow a hard line against his own nation.
The symbolic over the substantive
France’s economy is beginning to look stagnant and despite an attempt to embrace a more pro-business stance and spending cuts of EUR 50 Billion spread over three years the sense is that this is no more than lip-service as against a genuine change of direction. The Prime Minister, Manuel Valls, says he wishes to see greater flexibility in labour laws and yet will not go too far in this direction for fear of angering the unions and other left wing parties that the Socialists frequently look to for support.
French president Francois Hollande has failed to deliver anything like the budget he promised during his election campaign in 2012. Photo: Thinkstock
Germany is increasingly frustrated by French demands for further forgiveness over the schedule for achieving its budget deficit target. The plea from Paris is for an extension of two years rather than one, which in addition to the leading economy, has irritated others. The Baltic states have made substantial reforms and Greece, Ireland and Portugal are aghast given the tough discipline demanded from the bail-out conditions.
Manuel Valls may want to adopt an agenda of reform, but as the economy fails to respond, so his approval rating is sucked down with that of the President. 
Source: Ifop
Breach of contract
The EC will declare that France is in breach of its commitments and a request for revisions will be sent to Paris. This request will not be met and rather than symbolically fine France a fee equal to 0.2 percent of its GDP, the discrepancy will be papered over. After all the EC and EU as well as the Eurozone have compromise, fudge and fiddle written into their DNA.
This will be the case because it will prove impossible for the EC/EU to press France too hard when there is a plan afoot to catalyse the economy via EUR 300 Billion of new pan European investment. The trouble is that this is just wishful thinking until the EC can answer the question: “Where is the money coming from?”
It does not take a genius to know what answer is doing the rounds in in European corridors. The European Central Bank, the IMF and others have urged the Merkel coalition government to reflate the economy through an infrastructure program and take steps to encourage consumer spending. When that occurs the private sector will increase investment and the economy will recover.
Why is it that France will not be punished by the EC as it should be and be allowed to follow its oneiric economic imagery that it and the wider Eurozone could be a utopian Cockaigne as the region thrives on German created usufruct. Good luck with that as the Merkel mantra is the prioritising of a return to budget surplus and more debt reduction. Critics say this has no real economic consequence other than dampening spending and economic growth. I say it is time for all inside the Eurozone to wake up, decide that if it wants the Eurozone to continue it must redraft the charter of the ECB to allow full scale quantitative easing and to demand, not ask, that member nations abide by the clubhouse rules or be shown the door. France and the Eurozone at large have reformation needs that are increasingly exigent.