Speedy and efficient liquidation of insolvent companies is crucial for the economy’s overall ability to restructure, innovate and grow. This is closely related to creditor protection. Creditors enjoy high standing in Norwegian legislation. High creditor protection makes it relatively easy for creditors to demand liquidation when the conditions are met. As long as the legal system and administrators in bankruptcy function as intended, the creditors may realise their claims on the estate and resources are freed up for society. It is essential that resources – labour, skills and capital – that are tied up in an unprofitable business are freed up for new activities. This also provides adequate, if painful, adjustment in a crisis. The downturn is shortened, and the economy gets back on its feet faster. Household debt is harder to restructure. Norwegian households can settle debt by liquidating their assets, but this usually only takes place after the borrower dies.4 Before that, the rule is that debt follows you to your grave. Norway has a Debt Settlement Act. Very few would voluntarily petition to enter into a debt settlement arrangement. While some of the debt may be forgiven, such an arrangement involves garnishment of wages, down to the minimum for necessities. Many of those who enter into such an arrangement in Norway struggle with debts incurred while self-employed. Recent years have seen a sharp rise in consumer debt. Defaulting on this sort of debt is much more common than defaulting on a residential mortgage. Default does not mean that lenders forfeit their money.
At a time when so many other parts of Europe were stagnant or in recession, this should not come as a surprise. Additionally, French consumption, which had been very resilient during the crisis, was weakened by the fact that to restore credibility in the consolidation of public finances the government decided to implement a number of tax increases. These inevitably have had an impact on consumers’ behaviour. I do not believe that this will necessarily last, because the savings ratio in France is high compared to the average elsewhere in Europe. We can therefore expect the savings ratio to decrease somewhat, leading to a more sustained recovery in consumption. That is hopefully one positive factor for the future. Another is that France is definitely moving towards reversing the trends in terms of competitiveness. The country is now demonstrating that there is a clear understanding of the need to pay close attention to firms’ production costs, which is illustrated by the government’s so-called Competiveness Pact. It is also illustrated through a number of structural reforms that have started to be introduced to increase the flexibility of the economy and make job creation more resilient. From that standpoint the first move which is very significant is the so-called National Pact between business and unions which will be vetted by law. This is a complete reversal of the previous trend. So in a sense, yes, the modèle Français is adapting. But I also think the model is retaining some features which are strong cultural characteristics.