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27 November 2012

DW: France must face up to reforms


French President Hollande has prompted incomprehension abroad with his taxing of millionaires at 75 per cent, and reducing the age of retirement from 62 to 60 since taking office six months ago.

Until now, France - like Germany - has been one of the winners in the eurozone crisis, and can borrow money at historically low interest rates. Still, said Claire Demesmay, of the German Council on Foreign Relations, the Moody downgrade is a clear signal "that François Hollande has his back up against the wall and has no choice but to bring on reforms in the country".

France looks enviously at German mid-sized businesses known for their innovation and market leadership. Other than a few global corporations, France is home to many small companies with fewer than 50 employees: that's because a crew of over 50 workers means countless more employment regulations, including strict protection against dismissal.

Even if France has a tough time competing with Germany, Jörg Krämer, chief economist at Commerzbank, refuses to call France the eurozone's next problem child. "France is a source of insecurity, but I think there are bigger problems in Spain, and especially in Italy."

And the country's key data still do justice to the "Grande Nation": France, for instance, had the fourth largest foreign investments in the first half of the year; it is the fifth largest economy and the sixth largest exporting nation in the world. "France still has a strong industry and large companies operating across the globe, and its demographic situation is also advantageous for the economy", Claire Demesmay noted. In addition, its reliance on nuclear power means that energy costs are lower in France than in other European countries.

Full article



© Deutsche Welle


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