November 29, 2012 / 7:08 PM / 5 years ago

Factbox: Political risks to watch in France

3 Min Read

PARIS (Reuters) - President Francois Hollande's plans to shake up France's strict labor market rules face a key test in December as his Socialist government presses unions and employers to agree on the outline of reforms.

Labour Reform

Unions and employers are making little progress towards a deal on labor reform before a year-end deadline set by Hollande's government, raising the risk it may be pushed back or the government will have to legislate without their support.

The government needs wide backing from unions and employers alike to ensure the reforms, which investors and ratings agencies are watching closely, are ambitious while not alienating Hollande's left-wing allies.

What to Watch

- Can unions and employers strike a meaningful deal

- Will the year-end deadline be met

Industrial Policy

France's feisty industry minister, Arnaud Montebourg, risks spooking investors with his increasingly aggressive tone towards companies planning shutdowns.

Montebourg has threatened to temporarily nationalize ArcelorMittal's Florange steelworks if the company refuses to keep two idled blast furnaces running, triggering sharp criticism from business leaders.

What to Watch

- Whether the nationalisation threat is heeded

- Fresh anti-business language from Montebourg

The Imploding Opposition

Fierce infighting among the opposition conservatives over the UMP party's leadership is providing political relief for Hollande as his ratings plumb new lows due to the dim economic outlook and surging unemployment.

The potential break-up of the UMP should ensure a weak opposition at a time when Hollande is struggling to secure support from left-wing allies on key legislation such as the budget bill.

What to Watch

- Whether the UMP can overcome its leadership stalemate

- Whether UMP splits into two groups

Mali and Syria

The longer the security situation in Mali goes without a solution, the greater the risk of attacks from Al Qaeda's North Africa arm against French interests overseas or even in mainland France.

France has also broken ranks with allies over Syria by quickly recognizing a new opposition bloc, running the risk of isolation on a key diplomatic dossier.

What to Watch

- Signs of deterioration in Mali's security situation

- More international backing for the anti-Assad coalition

Reporting by Leigh Thomas

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