Washington, DC ― A new reportfrom the Center for Economic and Policy Research (CEPR) concludes that policy constraints imposed on France by the European authorities, including the International Monetary Fund (IMF) are likely a significant drag on the French economy that limit options for increasing economic growth and decreasing unemployment.
“It is unlikely that the French electorate will accept the European authorities’ constraints or regressive reforms indefinitely,” said [/FONT][/COLOR]Mark Weisbrot, CEPR Co-Director, and lead author of the report. “The rise of the far Right that blames France’s problems on minority groups and foreigners is clearly a result of these failed policies and of centrist politicians’ embrace of them. At the same time, there has also been a recent upsurge of support for feasible, progressive alternatives.”
Ahead of the French elections (the first round on April 23), France has experienced a lost decade, with almost no growth in per capita GDP. Unemployment averaged 10 percent for 2016.
The report notes: “With inflation at 0.35 percent, and real borrowing costs basically zero, the government has the potential through spending and public investment to dramatically lower unemployment. The constraints on increasing employment and growth appear to be political, not economic.” Yet the European authorities are pushing for greater restrictions on public spending, with the IMF recommending “limiting growth of government spending to the rate of inflation, as targeted in the government’s Stability Program.”
France has an interest burden on the public debt of just 1.7 percent of GDP, which is low by almost any comparison. The report finds that harsh public pension cuts during the last few years were unnecessary, since pension spending was projected to grow by just 1 percent of GDP over the next 60 years.
The CEPR report notes: “The spending cuts that the government of France has agreed to for the next few years would preclude a role for the government in reducing mass unemployment.”
The European authorities, including the IMF, advocate a reduced welfare state, including cuts to public pensions and health care spending, labor market reforms that diminish the bargaining power of organized labor, reforms that increase labor supply, and overall reduction of spending and taxation. Some of these reforms have already been enacted, having been met with large protests, and made the current president, François Hollande, too unpopular to run for re-election.
The paper notes that the European authorities pushed similar policies that contributed to economic crises and recessions in Spain, Greece, Italy, Portugal, and elsewhere, and so their recommendations for France should be viewed with a critical eye.
Frances problem is French labour laws. That is what is holding France back..
Never the EU Pete.
Never the EU Pete.
Never the country's own actions, gunner.
I have never said that.. but in this case, as long as France has such draconian labour laws, that make it nearly impossible to fire people without massive costs.. then yes, it is their own fault. Time and time again, we have seen countries move to more free and fair labour laws (Denmark and Germany come to mind) and it has improved the economy massively and it is the only way forward. Spain has a similar problem, although they have changed it lately to improve the situation, but have long to go.
Lets be frank here.. if you have labour laws that mean it is cheaper to have unproductive incompetent workers on the payroll than firing them.. then that will reduce the willingness of business to establish new jobs. That is France in a nutshell. They can reduce working hours and all that socialist bs, but reality is that as long as business cant fire people when needed, then you wont get anywhere.
And yes, the EU has absolutely nothing to do with French labour laws and have been calling for reforms for over 20 years.
I think we've had this discussion numerous times. The finer details are critical for it not to turn into, let's fire on a whim.
Eh? We have never had a discussion about French labour laws.
Labour laws in general, many times. You've pretty much been clear on 'fire at will', although you'll protest otherwise.
I have never said that.. but in this case, as long as France has such draconian labour laws, that make it nearly impossible to fire people without massive costs.. then yes, it is their own fault. Time and time again, we have seen countries move to more free and fair labour laws (Denmark and Germany come to mind) and it has improved the economy massively and it is the only way forward. Spain has a similar problem, although they have changed it lately to improve the situation, but have long to go.
Lets be frank here.. if you have labour laws that mean it is cheaper to have unproductive incompetent workers on the payroll than firing them.. then that will reduce the willingness of business to establish new jobs. That is France in a nutshell. They can reduce working hours and all that socialist bs, but reality is that as long as business cant fire people when needed, then you wont get anywhere.
And yes, the EU has absolutely nothing to do with French labour laws and have been calling for reforms for over 20 years.
From here: European Authorities’ Policy Constraints Are Hampering French Economic Growth and Employment, New CEPR Report Finds
Excerpt:
The chicken or the egg, which came first? (Ask Angela!)
Some EU-states, after the adoption of the Euro, failed to bring their national accounts in-line with their capacity to develop revenues. So, they borrowed heavily and at high interest-rates to balance their books. That "bird" has come home to roost.
The countries in question - nominally in the southern-Europe - are only starting to rebuild Consumer Demand. And since most tax-revenue comes out of Value Added Tax (goods/services sales) receipts are building - but not yet significantly enough.
And yet, it is only by Stimulus Spending can GDP-growth accelerate significantly ...
The French problems are real and would be difficult even in a pure free trade area without the political regulation and currency. Both make adjustment more difficult, but the loss of the flexibility of currency and interestrates is certainly the greatest problem. It means the whole process of price adaptation must be carried out domestically, politically and in an overwhelmingly for every contract but at least at the union and wholesale levels throughout the economy. This is highly cumbersome compared with a currency rate move and costs an incalculable amount of political capital.
Horse****. The adjustment is not more difficult, it is more like inevitable and thats the point. Countries like France, Spain, Greece, Italy have all lived on the ability to devalue their currency when things get tough and never force through the structural reforms needed. Greece has been forced, Spain has been forced and Italy will be forced at some point. France needs to wake up and smell the **** of an economy their outdated labour laws have created. Leaving the Euro as you want, will mean that these countries wont do the reforms needed... why should they, they can just devalue their currency and all is fine for a short while.
You are a tough man. I certainly wish it were you taking the medicine instead of the weak and abject poor in Greece.
That would make you somewhat tolerable with your "Never the Eu!" stance. As it is, you are willing to sacrifice millions of peoples present and future well being at the alter of your ideology for no better reason, than an unfounded belief in the propaganda of your elite. It is really quite horrid.
More bs. Its called tough love... an addict wont change his/her ways without being forced to realise what is causing their problem and admitting it. This takes time. Having the addicts live on and on with their addiction is a much bigger sacrifice that will end in death.
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