Photo: The Economist
As reported earlier, the latest Economist cover, with the baguette bombs has folks in France angry. Part of it may be the goofy representation of a French time bomb. But more importantly, The Economist is respected, and there have always been worries that France’s economy is more PIIG-like than core-like.So what’s actually in the piece?
Here are some key bullets from the report.
- Public spending is 57% of the nation’s output.
- Debt-to-GDP is 90%.
- No new company has entered the CAC-40 stock market index since 1987.
- Nobody gets fired. Unions protest over any reforms.
- France still has a high standard of living, and has some of the best companies in the world, but growth has stalled.
- Unemployment is 10%. Youth unemployment much higher.
- France can still borrow cheaply, but it’s also resting on past laurels (it’s still a gigantic tourist destination).
- New President Francois Hollande is ostensibly powerful, but his approval rating has plunged.
- He refuses to really acknowledge France’s economic challenges.
Overall, it’s really not as bad as the cover suggests.
On a host of indicators, France is right in the middle of the pack: Not growing robustly, but not seeing the bottom falling out either. Hence the time bomb metaphor: The Economist is not a fan of high debt-to-GDP and rigid labour market rules. But the country still has not gotten sucked into the Southern Europe vortex.
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