France’s new president, François Hollande, has achieved a remarkable series ofpolitical victories – at home and in Europe –since his election in May. Unfortunately, his streakof success will inevitably call forth aneconomic reckoning that will shock France’s apparently unsuspectingcitizens and doom the French elite’s approach to the “construction of Europe.”

Since winning the presidency, Hollande has won a parliamentary majority andpushed Germanytoward accepting joint liability for eurozone countries’ debts. But forebodings of crisis have become widespread inFrench business and economic circles.

But the real danger – which even Hollande’s sternestcritics may be underestimating – is not so much his individual policy failings(serious though they may be) as his approach to the twinchallenges posed by France’s economic imbalances and the eurozonecrisis. On each front separately, he might manage tomuddle through; together, they look likely to cementFrance’sloss of competitiveness.

Declining competitiveness is best captured in a single indicator: unit labor costs, which measure the average costof labor per unit of output. In a monetary union, discrepanciesin wage growth relative to productivity gains – that is, unit labor costs –will result in a chronic accumulation oftrade surpluses or deficits.

Since the euro’s introduction, unit labor costs have risen dramaticallyfaster in France than theyhave in Germany.According to Eurostat data published in April 2011, the hourly labor cost in France was