France world’s fifth largest economy – The time-bomb at the heart of Europe
Folks in France is fuming, and french officials are already hitting the airwaves – French time bomb “explosive baguette bombs”. The Economist sensationalist journalism is basically calling out France (world’s fifth largest economy) is the “time-bomb at the heart of Europe.
Industry Minister Arnaud Montebourg told Europe 1 radio: “Honestly, The Economist has never distinguished itself by its sense of even-handedness.”
“It is the Charlie Hebdo of the City,” he said, referring to the French satirical weekly which in September drew international criticism for publishing cartoons depicting a naked Prophet Mohammad.
“The crisis could hit as early as next year,” the magazine warned in a cover story to appear on Friday with the sub-title: “Why France could become the biggest danger to Europe’s single currency.”
The cover seems to speak for itself – seven loaves of “baguette” bread held together by a French tricolour with a lit fuse protruding from the centre.
Although Hollande is pushing for measures to make France more competitive, “France is aiming at a moving target” because “all eurozone countries are making structural reforms, and mostly faster and more extensively than France is doing,” the magazine said.
“The IMF (International Monetary Fund) recently warned that France risks being left behind by Italy and Spain,” it noted.
“Mr. Hollande does not have long to defuse the time-bomb at the heart of Europe,” it concluded.
The Economist’s long list of French problems include a stagnant economy, high unemployment, a huge trade deficit and a public sector that accounts for almost 57 per cent of gross domestic product (GDP), “the highest share in the euro zone.”
Read The Economist’s story here.
- Public spending is 57% of the nation’s output.
- Debt-to-GDP is 90%.
- No new company has entered the CAC-40 stock market index since 1987.
- Nobody gets fired. Unions protest over any reforms.
- France still has a high standard of living, and has some of the best companies in the world, but growth has stalled.
- Unemployment is 10%. Youth unemployment much higher.
- France can still borrow cheaply, but it’s also resting on past laurels (it’s still a gigantic tourist destination).
- New President Francois Hollande is ostensibly powerful, but his approval rating has plunged.
- He refuses to really acknowledge France’s economic challenges.
But is the Economist’s assertion really that extreme?