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Economists dub France the ‘sick man of Europe’

After a leading economic think-tank dubbed France "the sick man of Europe", claiming nothing has changed in two years, a French economist hits back telling The Local things are changing but it's unrealistic to expect a revolution.

Economists dub France the 'sick man of Europe'
"Any reform in France ends up in street protests" claim the authors of a damning economic report on France by The Lisbon Council. Photo: Fred Tanneau/AFP

A new report by The Lisbon Council, a Brussels-based think tank, will not have gone down well in the corridors of power in Paris this week after it labelled France the real "sick man of Europe".

Whereas the Euro Plus Monitor report was optimistic for the rest of Europe to pull out of the crisis it singled out France for a rollicking, saying its economic policies have changed little.

"In the 2011 Euro Plus Monitor, we warned that 'alarm bells should be ringing for France.' It came out as the only major economy in Europe which is stricken with deep-seated fundamental weaknesses without doing anything about it," said the report which was penned by Dr Holger Schmieding and Dr Christian Schulz from Berenberg, Germany’s oldest private bank.

"Unfortunately in two years nothing much has changed."

The Euro Plus Monitor looks at a country's ability to reform and ranks countries according to the "global health" of their economy. In the 2013 study France was placed 16th ahead of Portugal and Greece but behind Spain.

However the authors warn that France could soon be "bottom of the pile" of Europe's economies and echoing a phrase that was once famously used to describe Germany in the 1990s it twisted the knife saying "France really is the sick man of Europe."

The problem with France, the Berenberg economists say, is that there are not enough economic reforms taking place and those that have been implemented barely scratch the surface.

"The French aversion to reforms and its politics is a serious tail risk for Europe. 

"Reforming France is difficult due to the French tradition of staging major protests against even minor changes to perceived entitlement. President Hollande currently seems unwilling to deliver more than a series of modest changes. 

"The possibility of France committing political suicide and blowing up the Euro and its alliance with Germany is one of the key tail risks to watch in Europe."

EU Commissioner Olli Rehn agreed, saying: “France has a tendency of increasing the taxes instead of going for structural reforms, which is not good for growth."

However the Berenberg bank pair said there was good news for France if it could sort its economy out because, unlike Germany in the 1990s, France "has the young people and the babies to fill the jobs of the future".

Naturally not all economists agreed with The Lisbon Council's damming verdict on France.

Christophe Blot from the French Economic Observatory in Paris told The Local that France had implemented reforms if not the "revolution" that liberal thinkers have been calling for.

“It’s not true to say there’s been no change in France since 2011. Of course there hasn’t been a revolution in economic policies but there have been reforms," Blot said.

“Things are being done to reduce the public deficit. There have been tax increases on the one hand and now the government is focusing on cuts to public expenditure.

There have been reforms to the pension system aimed at postponing the age at which people retire."

Those controversial reforms, which have provoked street protests, raised the pay-in period for pension contributions from the current 41.5 years to 43 years by 2035, meaning employees will need to work longer to be eligible for full pensions.

The plan also proposes increasing employee and employer contributions to France's retirement system, but avoided more controversial proposals such as raising the official retirement age from the current age of 62.

Blot pointed out that there have also been reforms to the labour market aimed at increasing flexibility after the government reached an agreement with trade unions.

“There have also been tax reductions introduced for firms to help them become more competitive. Maybe these reforms will take some time to have an effect," said Blot.

“France is certainly not the sick man of Europe. You just have to look at Spain, Portugal and Greece where the level of unemployment is much higher. The main problem in the Eurozone is not France’s lack of reforms but a lack of demand and the impact of too much austerity.

“These reports are often written from a liberal point of view; they want to see these major reforms in France but anyone hoping for a revolution will be disappointed.

"Perhaps going slowly is the right way to go for France," Blot said.

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FRAN

Goal-shy France under pressure to beat Georgia

France are under pressure to secure a win in their World Cup qualifier against Georgia on Friday night. The fixture would normally be straightforward for Les Bleus but their troubles scoring goals means it could be a tricky night in Tbilisi.

Goal-shy France under pressure to beat Georgia
Les Blues coach Didier Deschamps faces the media ahead of the crucial World Cup qualifier against Georgia. Photo: Franck Fife/AFP

Shot-shy France need to find a cure to their goalscoring ills when they face Georgia in a tricky World Cup qualifying fixture in Tbilisi on Friday evening.

Didier Deschamps's side come into this month's qualifying double-header in Georgia and Belarus in second place in Group I, a point behind leaders Spain and four points clear of Finland in third.

Finishing above the reigning European and world champions may be beyond Les Bleus, but they should still be strong enough to claim second place and a spot in November's two-legged play-offs.

Nevertheless, to win in Georgia — where Spain toiled to a 1-0 win earlier in the campaign — and go on to reach next year's finals in Brazil, France must sort out their problems in front of goal.

Following last month's 0-0 friendly draw in Belgium, France have now gone six hours without scoring since their 3-1 win against the Georgians at the Stade de France in March.

It is largely because of their struggles in front of goal that Deschamps's side have lost four of their six matches in 2013 and the focal point of criticism amongst fans and the media has been Karim Benzema.

The Real Madrid striker is supposed to be the national team's star man, and yet he has not scored in 19 and a quarter hours on the field at international level since bagging a brace in a friendly against Estonia ahead of Euro 2012.

"Karim keeps being mentioned because of his lack of goals for us. I hope he puts an end to that as soon as possible," bemoaned Deschamps before the squad departed on Wednesday for Tbilisi, where the game will be played at 2215 local time (1815 GMT) to fit in with peak television viewing times in France.

Benzema has no shortage of support from his colleagues, with Arsenal defender Laurent Koscielny saying: "His qualities can't have disappeared overnight. He just needs that trigger to regain his confidence. The team is right behind him."

But while France boast the 2012-13 European player of the season in their ranks in Franck Ribery, as well as Marseille's Mathieu Valbuena, who excelled in the home win against Georgia, Deschamps must decide who to play in front of his chief creators.

He has options beyond simply sticking with Benzema at the head of a 4-2-3-1, with one being to pair the 25-year-old with Arsenal's Olivier Giroud, scorer of the winning goal in last weekend's north London derby against Tottenham Hotspur.

Another option is for Deschamps to hand a start to Andre-Pierre Gignac, the burly Marseille striker who was handed his first call-up since the 2010 World Cup after scoring three goals in the first three games of the Ligue 1 season.

"The coach must make choices. We are lucky to have quality strikers and that should give us strength rather than be a problem," insisted Arsenal full-back Bacary Sagna.

"Giroud is as much at ease at his club as he is with France. But we point the finger at Karim because he is a centre-forward and that is unfair. The rest of us players need to give him more support."

Elsewhere, with Tottenham's Etienne Capoue and Lyon's Clement Grenier having pulled out due to injury, it seems likely that Josuha Guilavogui and Geoffrey Kondogbia will play together in central midfield.

Kondogbia won his first cap against Belgium last month before joining Monaco from Sevilla for 20 million euros ($26.8 million), while Guilavogui last weekend left Saint-Etienne for Atletico Madrid.

Temuri Ketsbaia's Georgia side have collected just four points from five games and have scored just three goals in that run.

   Group I


Spain                5 3 2 0  8  2 11

France               5 3 1 1  8  4 10

Finland              5 1 3 1  4  4  6

Georgia              5 1 1 3  3  7  4

Belarus              6 1 1 4  4 10  4

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