France's sharp turn away from a costly jobs-creation program toward a stringent austerity plan has failed to calm international anxieties over the future of the French economy.
Bankers and economists are quick to emphasize the country's underlying strength as a Western industrial power and say that France's economic troubles do not stem from the kind of enormous debts that recently pushed Mexico and Brazil to the brink of bankruptcy.
Nevertheless, a mounting trade deficit and the risk of a new surge in inflation when a four-month wage and price freeze is lifted Nov. 1 have intensified speculation that President Francois Mitterrand may be forced to devalue the franc for the third time in his 17-month tenure.
Prime Minister Pierre Mauroy said Tuesday that the government is prepared to use special powers of decree to keep inflation in check through 1983. He said such controls are necessary to cope with "a crisis that will endure a long time and will have consequences for everybody."
When the Socialists took power in May 1981, Mauroy was a leading proponent of an ill-fated expansion policy that stressed the need to reduce unemployment.
Anticipating new pressures on the franc, the French government last month arranged for a 10-year, $4 billion syndicated loan to be used as standby credits to protect its currency. Bankers described the move as an effort to "deepen the pockets" of France's central bank after several months of propping up the franc caused a severe hemorrhage in foreign reserves.
Much to the government's chagrin, a cornucopia of export orders has failed thus far to materialize after two devaluations within a year. Despite a cumulative 27 percent decline in the franc against other currencies, France is facing a projected trade deficit this year of $12 billion.
A prime reason, say French diplomats, is that the country's major exports consist of such big-ticket items as airplanes, trains and subway cars, which find few buyers in today's depressed world markets. The weakened franc has also meant higher bills for oil and other imports that require payment in dollars.
The prospect of a new devaluation may hinge on the degree of cooperation in currency markets that Mitterrand receives in coming months from West Germany's new chancellor, Helmut Kohl.
During Helmut Schmidt's years in power, the Bundesbank intervened frequently to buttress the value of the franc and to maintain its stability within the European Monetary System.
As an advocate of a strong French-German axis to serve as a counterpoint to U.S. economic dominance, Schmidt was willing to spend large sums of marks to support the franc as tangible proof of his commitment to closer European unity.
Kohl, on the other hand, seems less inspired by international vision and more interested in reviving West Germany's economy. A fervent conservative, he appears more inclined to pursue policies that strengthen the German mark--to the detriment of the French franc.
With inflation in France consistently running a few points higher than in West Germany, the problems of the franc will become even more onerous if Bonn decides to curtail its assistance and become more reluctant about intervening in currency exchanges.
As the recession in Europe deepens, bankers and economists have grown increasingly worried about a flurry of competitive devaluations that could seriously constrict trade and darken hopes for an early recovery.
Last week, concurrent devaluations of the Finnish mark and Swedish krona aroused concern that the Danish krona and the franc would soon follow suit.
"If the Danes devalue, the French may have to do the same thing by the end of the year," said Waits Rawls, senior vice president for Chemical Bank. "The market psychology is saying that a new devaluation of the franc might be in the range of 8 to 12 percent." Exchange traders say that the persistent pressures on the franc reflect a lingering suspicion that the Socialists will prematurely abandon a disciplined program of budget cuts and higher taxes in favor of their original plan to expand the economy and create new jobs.
When the wage and price freeze was imposed last June, France's inflation rate had spurted to 13.5 percent. Through its rigid system of controls, the government hopes to reduce that rate to 10 percent for this year and to 8 percent by the end of 1983.
French officials believe that ultimate success in the fight against inflation will depend on convincing the unions to accept wage increases no higher than 7.5 percent. The Socialists are counting on their Communist allies to persuade rank-and-file workers to swallow the limited raises to bolster the prestige of the left.
However, Communist workers have grown increasingly disenchanted with the Socialists' jarring policy shift that resulted in new plans for sweeping cuts in social benefits, as well as some higher taxes.
Despite the danger of alienating their supporters, the Socialists have reluctantly concluded that future economic expansion will require holding down wages to improve the capability of French firms to pour profits back into investments.