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France

French economy is 'sick', says new economy minister

Text by FRANCE 24

Latest update : 2014-09-17

France's new Economy Minister Emmanuel Macron on Wednesday urged immediate reform to tackle an unemployment rate surpassing 10 percent and stagnant growth, saying the French economy is "sick".

"France is sick. It's not well. We have to describe the situation as it is," Macron told French radio.

"There has been a fever for several years in this country, which is called mass unemployment ... There is no choice but to ... reform the economy," said Macron, 36, a former Rothschild banker, who was chosen to serve as economy minister after a surprise cabinet reshuffle last month.

The political shakeup was announced after the former economy minister, Arnaud Montebourg, publicly criticised Hollande's economic policies and called for a "major shift" away from the austerity policies that he said were "imposed" by Berlin.

France, the eurozone's second-largest economy, is suffering from a record high unemployment rate of over 10 percent and has registered no economic growth in the past two quarters.

Paris is also battling to reduce its ballooning public deficit, which is expected to be 4.4 percent of gross domestic product (GDP) this year and is expected to drop only marginally to 4.3 percent in 2015.

France has gone back on a promise made to the European Union to get the deficit below the maximum allowed by the EU – 3 percent of GDP – by next year. France now foresees only meeting the EU requirement in 2017, setting France on a collision course with Brussels as well as pro-austerity Germany.

Added to its economic woes, the country is weighed down by a political crisis that has seen President François Hollande's approval rating drop to 13 percent.

The government's unpopularity "is due to a lack of results", said Macron.

"We didn't go far enough in our first two years, we didn't reform and we are paying, if I may say, for a lost decade," he said.

The government of Prime Minister Manuel Valls narrowly won a parliamentary confidence vote by 269 votes to 244 on Tuesday.

However, around 30 MPs from the ruling Socialist Party abstained in the vote, a rebellious left-wing rump that could cause problems for the government in future parliamentary votes.

Part of the French government's response to the economic crisis is a so-called Responsibility Pact, a €40 billion ($52 billion) package of tax breaks for businesses, to be financed with €50 billion in public spending cuts.

But the plan has been the target of left-wing politicians for being too business-friendly and too austere at a time of economic crisis.

(FRANCE 24 with AFP)

 

Date created : 2014-09-17

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