The French capital has taken the extraordinary step of banning the sale of alcohol after 8pm during the current heatwave, a move that has sent a chill down the spine of the City's hospitality sector. The measure, announced by the Préfecture de Police late Tuesday, is aimed at preventing a repeat of the public disorder that marred last summer's heat-related unrest. For British tourists, already battered by the pound's slide against the euro, this is another unwelcome headwind. The ban, which will remain in force until temperatures drop below 35°C, is a stark reminder that even leisure activities are subject to the capriciousness of central planning.
I find it deeply troubling that the state feels compelled to intervene in such a micro-managed fashion. The rational response to a heatwave is for individuals to adjust their behaviour: drink responsibly, stay hydrated, and avoid the midday sun. Instead, we have a blanket prohibition that treats the entire populace as undisciplined children. This is the fiscal equivalent of a price cap: well-intentioned, but ultimately counterproductive. The black market for chilled rosé will no doubt flourish, and the government will lose valuable tax revenue from legitimate sales.
The timing could not be worse for British holidaymakers. Sterling has already lost 5% of its value against the euro this year, making a pint of lager in Paris cost nearly £8. Now, with the curfew in place, they cannot even drown their sorrows legally after dinner. The irony is that the heatwave is a direct result of climate change, a phenomenon that the French government claims to take seriously. Yet here they are, imposing a measure that will do nothing to reduce carbon emissions. This is virtue signalling at its most expensive.
From a market perspective, the Parisian hospitality sector is facing a perfect storm. The ban on evening alcohol sales will hit the city's bars and restaurants hard, just as they were hoping to capitalise on the post-pandemic tourism rebound. Shares in companies with exposure to the French leisure market have already dipped in early trading. I expect further volatility as investors price in the risk of extended curfews across other European cities. The lesson for portfolio managers is clear: diversify away from assets that are vulnerable to arbitrary government intervention.
The Bank of France has remained silent on the matter, which is telling. They know that this is a politically motivated decision with no economic basis. The Governor, François Villeroy de Galhau, should have stepped in to warn about the inflationary consequences of a reduced supply of alcohol. Instead, he has chosen to stay out of the fray, leaving the market to absorb the shock. This is a missed opportunity for central banks to demonstrate their independence from fiscal folly.
For British tourists, the advice is simple: stock up on duty-free before crossing the Channel, and treat the Parisian curfew as a warning of what might come to London if the authorities here lose their nerve. The British government has already shown an appetite for nannying during the pandemic. It would be no surprise if a heatwave in the UK prompts similar restrictions. The Conservative party, once the champion of personal freedom, now appears willing to sacrifice liberty on the altar of public safety.
In conclusion, the Paris alcohol curfew is a classic case of a government overreaching. It will do little to prevent heat-related incidents, but it will certainly damage the local economy and infuriate visitors. The market's verdict will be harsh. I expect gilt yields to rise as the cost of this regulatory overhang becomes apparent. Invest accordingly.
