Crisis deepens with France set for recession
AFP/The Local · 3 May 2013, 11:56
Published: 03 May 2013 11:56 GMT+02:00
- 'France needs solidarity - not Thatcherism' (17 Apr 13)
- France to fall into recession this year: IMF (16 Apr 13)
- French debt making Europe 'vulnerable' (10 Apr 13)
France is set to slide into recession this year with negative growth of 0.1 percent and unemployment rising to 10.9 percent in 2014 after 10.6 percent this year, the European Commission said on Friday in its spring forecasts.
The Commission also released a bleak picture of the country's public deficit, projecting an increase from 3.9 percent of GDP this year to 4.2 percent next year compared with government forecasts of 3.7 this year and 2.9 percent in 2014.
Separately on Friday the EU's Economic Affairs commissioner Olli Rehn on Friday said it would be "reasonable" to give France two extra years to meet the EU deficit target of three percent.
The commission presented its forecasts not long after the International Monetary Fund also predicted France was set for a recession.
In its latest revisions, the International Monetary Fund dropped its previous forecast of 0.3 percent growth this year, but still expects the French economy to rebound by 0.9 percent in 2014.
"France's growth is forecast to be negative in 2013, reflecting a combination of fiscal consolidation, poor export performance, and low confidence," the IMF's chief economist Olivier Blanchard said in the foreword to its latest World Economic Outlook report.
The IMF's latest forecasts are more pessimistic than those the French government signed off as part of its plan to get its public deficit back under the EU limit of 3.0 percent of output by 2014.
All of this puts more pressure on President François Hollande as he is about to mark the one-year anniversary of his election victory over then incumbent Nicolas Sarkozy.