01/18/2012 03:57 pm ET Updated Mar 19, 2012

The Next French President Won't Be Who You Think

Last Friday, France's AAA-rating was downgraded by Standard & Poor's. This announcement gives us a little clue of the next French president's name.

As a French person, I have to admit that France and the United States don't usually play in the same league. Usually America is out in front. But now there's one thing that put us on the same level. Since last Friday, France has joined the U.S. in the inglorious group of countries downgraded by rating agencies after Standard and Poor's removed the French AAA.

This announcement was hardly a surprise: Investors had already scaled up the borrowing rate of France months ago. Not a surprise, but deeply discomfiting nevertheless for the French President Nicolas Sarkozy, who has made the defense of the French top rating a personal commitment. He even told the French people the triple A was "a national treasure. Today, these promises look like Don Quixote tilting at windmills. In spite of a set of austerity measures to calm the investors' mistrust, the signal is now clear: It's not enough.

So far, in France, austerity has meant primarily increasing taxes. Nicolas Sarkozy always claimed, when he was a candidate, he would never raise taxes. But who cares now? France still has a high deficit and its level of debt, as big as the annual GDP of India, is on a never-ending upward curve. Unemployment stands at 9.3 percent and growth at the miserly rate of 1.7 percent in 2011. The priority for the government is now to save the old boat of the French welfare state until the next election, without burning too much political credit.

As an unapologetic right-wing politician, Nicolas Sarkozy has appeared surprisingly shy of taking any risks in radically reshaping French society. That's the big difference between the French President and David Cameron, the British Prime minister, whose concept of a "Big Society" has led him to implement massive spending cuts in the State payroll and to continue the privatization of the public sector initiated by the previous government. Nicolas Sarkozy has failed to stimulate the French economy. But the need to stimulate growth has never been so absent from the public debate.

This is where the crunch will come. French companies still suffer unbearable labor costs. The labor code -- a 2,700-page hefty tome -- remains a serious brake on flexibility for employment. At school -- and then in many people's minds -- companies are described as an alienating place, rather than a place of personal development. Setting up in business is still a commando course across red tape and tedious rules. And the burden of public spending -- nearly 56 percent of GDP -- continues to slow down the vitality of the French economy. Five years after Mr. Sarkozy's election, there still remains the challenge of liberating growth. It's not an easy task given the strength of bureaucracy and corporatism in France.

This may explain why the campaign for the presidency remains so insipid. It's not addressing the real issues. Let's go back to the past. In 2007, an incredible expectation for change gripped France after 12 years of the reign of Jacques Chirac. The two main candidates -- the liberal Ségolène Royal and the conservative Nicolas Sarkozy -- succeeded in catching people's attention and in injecting a spectacular energy into the country. That's probably why abstention was particularly low in comparison with other presidential elections. After his election, Nicolas Sarkozy had a strong approval rating. Today, the president's star has waned and he has become one of the most unpopular presidents of the Fifth Republic.

In such a political context, one thing is obvious: the next president will have a really hard job. Politically, promising to tackle austerity won't gain friends for any future President and it's economically risky. There is no worse outlook for a politician. Even among the candidates, there is a strange feeling that none of them is in the mood for campaigning. Probably they know that they will be chained to political choices they don't want. This week, François Hollande, the liberal candidate for the 2012 election, conceded that he wouldn't be able to implement his entire program because of the economic context.

Some extreme political parties don't feel bound by these constraints. For the so-called Front de Gauche -- close to the French communist party -- and the Front National -- a heterogeneous patchwork of extreme-right movements -- the solutions are simple but terribly populist. The reality of the debt and the deficit seems insignificant, because they think they will be able to put every millimeter of the economy under control. It's a big mistake. That's why they won't be elected, but they will certainly poll a large part of the votes.

The moderate parties -- the liberal PS party and the conservative UMP party -- know the margin of the next president will never have been so slender. They will have to cut spending and put the State on a diet if they want to keep bond yields at an acceptable rate.

Of course, no one can predict who the next French president will be. It doesn't really matter. The real winner will be austerity.