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IT MAY be fragile, but recovery seems at last to be under way in Europe, five years after the onset of its worst-ever post-war recession. In the first quarter of 2014, GDP in the euro zone expanded by 0.9% over a year earlier, and by 2.3% in Germany; it grew by 3.1% in Britain, which is outside the single-currency area. In the second quarter, the Markit purchasing-managers’ index for the euro zone reached its highest level for three years. Output has now risen for 12 months in a row. Yet amid all these signs of a belated upturn, as the Markit index cruelly revealed, there was one obvious and awkward weak link: France, the euro zone’s second-biggest economy. After two flat years, French growth came to a new standstill in the first quarter. The business-confidence index is down on nine months ago, according to Insee, France’s statistics body, whose “turning-point” indicator went negative in June for the first time in a year. Output in manufacturing and services also fell in June, for the second month running, according to Markit, and firms cut jobs for an eighth consecutive month. The French public-finances watchdog has warned President François Hollande’s Socialist government that its forecast of 1% growth for 2014 looks “high”. The European Commission adds that its expectation of 1.7% growth in 2015 is also optimistic. In this sectionValls’s difficult climb Bouncing back Of generals, judges and presidents Oh, brother A capital issue The accidental president ReprintsRelated topicsFrancois Hollande Europe France Manuel Valls When Mr Hollande was elected two years ago, the economy was already in trouble. Yet his strategy of cutting the budget deficit by relying almost exclusively on tax increases — the overall tax take has risen from 44% of GDP in 2011 to 47% in 2014 — has cramped growth even more, as well as sapping broader confidence. Most worrying, investment has dropped or been flat in eight of the past nine quarters. Small companies are wary of taking any risks. Big French companies are more focused on investing in foreign markets. “Fortunately”, notes a French business chief wryly, “we don’t have much activity in France.” Into this gloom three months ago stepped Manuel Valls, whom Mr Hollande appointed prime minister after catastrophic local-election results had forced him to bring in a fresh face. A moderate centre-left maverick who once called for the word “Socialist” to be dropped from the party’s name, Mr Valls embodies a U-turn in economic policy that Mr Hollande has hinted at, but failed fully either to acknowledge or to implement. The new government promises to impose no more tax rises, to cut social charges on firms by an extra €10 billion ($14 billion) so as to kick-start investment and job creation (a deal known as the responsibility pact), and to make public-sector budget savings of €50 billion between 2015 and 2017. If it manages this, it will have cut the annual rise in overall public spending from 1.3% in 2013 to 0.1% in 2015, no mean achievement. For Mr Valls, his new job brings a chance to force the left in France to face some home truths about the limits of its old tax-and-spend model, and to shelve its traditional hostility towards profit and business, in a spirit of modern social democracy. He openly regrets that the government did not admit two years ago that things were so bad, according to some who have seen him recently.