Written by Hilary Barnes
Econintersect: The total of number of unemployed job seekers in France passed the three million mark in August, at 3.011 million, which was expected. As a percentage of the labour force this was 9.2% (10.1% for men, 8.3% for women), according to official figures this week.
The number was up by 254,000 from August last year and it is not easy to see what is going to stop it from increasing by the same number (at least) in the next 12 months.
The September report from INSEE (National Institute of Statistics and Economic Studies) indicated:
‘The French business climate remains deteriorated in September 2012’
Carlos Ghosn, CEO of auto maker Renault discussed the state of his company with Le Figaro:
Renault remains profitable, thanks to its alliance with Nissan. Free cash flow is positive and will be positive for the year 2012.
However, Ghosen added that:
An improvement in the competitivity of France is a matter of survival for Renault.
No automaker can escape the reinforcement of its ability to compete in its home market, but it is not something that Renault can do on its own.
Signals from the government in recent weeks have encouraged Renault’s boss. They go in the right direction, he said, referring to the government’s willingness to discuss improving labour market flexibility as well as improving cost competitiveness, probably by switching some “charges socials” from the employers and increasing either the value added tax on other broadly-based tax programmes.
Most private sector economists believe the government will probably miss its 3 per cent deficit target next year because growth will probably be weaker than the government’s forecast of 0.8 per cent.
Mr Moscovici acknowledged concern but insisted that greater stability in the eurozone and the government’s policies would enable it to hit or exceed the target.
“We are convinced the way things are evolving implies an improvement in confidence. I believe it is credible,” he said.
Investors gave the budget a cool reception with the CAC 40 index of big companies closing down 2.5 per cent.
Some economists and business leaders fear that the steep tax increases and relatively modest spending curbs could undermine France’s projected annual growth path of 2 per cent a year from 2014 to 2017, when it plans to have eliminated the structural deficit.
How tough are the tax increases? The top bracket in France will be 75%.
- French unemployment tops 3 million as economy struggles (BBC, 26 September 2012)
- The French business climate remains deteriorated in september 2012 (INSEE, 25 September 2012)
- Renault: nouvel appel de Carlos Ghosn (APF, Le Figaro, 28 September 2012)
- France unveils tough budget measures (Hugh Carnegy, Financial Times, 28 September 2012)