Critics of France’s Socialist government were quick to point the finger at president François Hollande and his ministers on Thursday after the latest figures on the economy made for some sorry reading.
The French economy showed zero growth for the second consecutive quarter of 2014 forcing the government to immediately revise its growth forecasts for the year and accept defeat in its attempt to meet deficit reduction targets set by Brussels.
Luc Chatel, secretary general of the opposition UMP party said the “political credibility” of Hollande and his PM Manuel Valls has “collapsed like a house of cards”.
The government needs to change not just its policies but “it’s software”, said Chatel.
“It’s an unprecedented crisis of state finances that has hit our country…We can’t just sit and wait with our fingers crossed,” he said.
Fellow UMP deputy Laurent Wauqiez said: “It’s in Paris that things need to change. The French economy has been asphyxiated by taxes and jobs do not pay enough.”
National Front leader Marine Le Pen said the figures “should alert our compatriots to the serious incompetence of our successive leaders.”
Criticism of France also came from abroad.
City analyst Marc Ostwald of ADM Investor Services blasted France for ditching its defecit targets.
#FranceGDP: abandoning deficit targets a declaration of political bankruptcy; likely to play a major role in reviving the Eurozone crisis
— Marc Ostwald (@MOstwald1) August 14, 2014
However shock figures which showed the German economy had actually contracted in the second quarter by 0.2 percent, confirmed to some economists that the heart of the problem lies within the eurozone and not just France.
“We can’t call France the ‘sick child’ of Europe,” Eric Heyer, from the French Economic Observatory tells The Local. “The whole of the eurozone is extremely ill”.
“This is not just a French problem. We need to remind ourselves that in 2012/13 the Eurozone was the only economic region in the whole world that was in recession.
“Italy is in recession and Germany has contracted by 0.2percent. With France, these are the three biggest economies in the Eurozone.”
Figures released later on Thursday confirmed that as a whole the eurozone's economy also showed no growth in the second quarter of 2014.
— Markit Economics (@MarkitEconomics) August 14, 2014
With France accepting it won’t be able to meet its deficit reduction targets Hollande will likely come under more pressure from Brussels to cut public spending but Heyer has warned against any more austerity.
“With no growth France cannot possibly meet its debt targets unless it implements more austerity, but reducing public spending further will plunge the economy into recession without doubt,” Heyer said.
Heyer says more flexible targets and a "measured" approach is needed that would reduce public debt without harming France’s chances of growth, even minimal.
The economist is not a proponent of making major structural reforms in France and warns that any such changes will have little effect on growth in the short term.
“We need to take a step back. Since the crisis of 2008 only the US, Germany and Japan have performed better than France. The figures are not glorious for France, but it’s been better than Italy and Spain.
The economist echoed the call by France’s Finance Minister Michel Sapin, who demanded the European Central Bank (ECB) do more to alleviate the crisis.
The ECB “must use all available means to fight deflation and bring the euro to a more competitive level,” said Sapin on Thursday.
Heyer also stressed that the ECB “must get inflation back to around the two percent mark.”
While Hollande will certainly not be enjoying his summer break, Germany's shock contraction may well make him more confident he can convince Brussels and Angela Merkel of the need to loosen the purse strings a little.