Emmanuel Macron handed stark warning over future as France in ‘massive economic trouble’
Emmanuel Macron using France as his 'laboratory' says Oulds
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France is reportedly furious with the UK over a reduced number of fishing licences being handed to small boat owners who fish in coastal waters. It has sparked a bloc-wide stance of solidarity, as member states prepare to back France and issue a joint declaration accusing the government of risking “significant economic and social damage”. The countries believed to be backing France include France, Belgium, Ireland, Spain, the Netherlands, Germany, Cyprus, Portugal, Denmark, Italy, Lithuania, Sweden, Malta and Latvia.
They are expected to make a thinly veiled threat about the possible impact on future EU-UK fisheries negotiations if the UK does not rethink its current stance.
President Emmanuel Macron will likely be bolstered by the support.
France has in recent years endured a period of financial hardship, despite its position as one Europe’s better-off nations.
The coronavirus pandemic hit the country particularly hard, leading to a historic economic contraction — a staggering 14 percent in the first quarter alone.
While recovery appeared dynamic — France posting the highest growth rate in the eurozone in the third quarter — the fourth quarter, according to economists, was synonymous with a new contraction in activity, the result of further lockdowns.
Even before this, France was struggling financially.
A slow population growth since the mid-Noughties combined with high unemployment post-2008 financial crash has made for a medley of economic crises.
Dr Alim Baluch, a professor who specialises in German politics at the University of Bath, told Express.co.uk that it all meant France was in “massive” trouble.
He spoke about how Mr Macron will not become the de facto leader of the EU after the departure of German Chancellor Angela Merkel, citing France’s financial woes as one of the reasons.
Dr Baluch said: “If we’re honest, France is really in massive economic trouble.”
While having improved in recent quarters — but knocked down by the pandemic — unemployment is rife in France.
In the fourth quarter of 2019, France posted an unemployment rate of 8.1 percent.
While it was down on the previous quarters, it was still comparably high.
In 2021, overall, unemployment in France was at 7.3 percent compared to the UK’s 4.3 percent — the latter figure having increased from 3.7 percent pre-pandemic.
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Higher unemployment in a country creates a soup of financial burdens: more state spending on state stipends, less consumer spending, less taxes being paid, and less cash flowing through the system.
France has managed to recover from financial fallout better than previously expected this year.
But the recovery has been unequal.
While some industries have reverted to pre-crisis level, others are still stuck in the mud.
Agnès Bénassy-Quéré, chief economist at the French Treasury, told CNBC earlier this year that huge amounts of government borrowing has placed France in a rut, hiking the country’s already mounting debt.
France’s national statistics office, Insee, at the beginning of the year reported that government debt stood at 115.7 percent of GDP at the end of 2020, up from 97.6 percent in 2019.
The question of how Mr Macron might tackle the debt crisis is even more uncertain.
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With a national election upcoming in April 2022, many say he is unlikely to take the most logical route of raising taxes.
Whether he will pursue his ambitious — and unpopular — reforms to modernise and simplify France’s archaic pension system is also uncertain given the pandemic.
Warning signs surrounding the direction of France’s economy were clear even in 2016.
At the time, the Organisation for Economic Co-operation and Development [OECD] said: “France’s fundamental economic problem is a lack of growth.”
Persistently weak economic growth has plagued France for years.
Between 1995 and 2007, GDP per person — an indicator of living standards — grew more slowly than in any other OECD country (mainly the rich nations) except Italy.
Officials hope that as borders open up France’s tourism sector will be revitalised.
But the problems appear to be more entrenched than the fallout from the pandemic.
Experts claim France’s “dual labour market” — where those already inside the upper levels of the labour market have higher pay, job security and promotions, but the young and others only get short-term work — is a big factor.
In an assessment of the French economy, the OECD says: “To reduce the duality of the labour market, the procedures for laying off employees, particularly those on permanent contracts, need to be simplified and shortened.
“France ranks among the countries with the strictest legislation of dismissal for open-ended and temporary contracts.”
The cost of labour to employers in France also includes social security contributions that are higher than in most other countries.
There is a catalogue of other reasons, and Mr Macron has just six months to produce a manifesto that promises to solve them.
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