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Economy

Zero, Stagnant, Inert – French Economic Growth Is Beautiful

Translated Tuesday 16 August 2011, by Gene Zbikowski and reviewed by Henry Crapo

The INSEE, the official French statistical bureau, has confirmed that second-quarter French economic growth was absolutely zero. No indicator warrants optimism and stagnation dominates.

These mediocre results truly confirm the many reservations expressed following 0.9% growth in the first quarter. This stagnation goes hand in hand with a drop in French household consumption and inertia in both production and investment. The French stock market, which is becoming increasingly hypersensitive and lunatic, has obviously fallen more than ever. To continue with the tendency to anthropomorphize “the markets,” one might say that they suffer from an awful hormonal problem.

The French minister of the economy, François Baroin, for his part, is breaking new records in optimism. He confirmed on RTL radio on August 13 the government economic growth targets are 2% for this year and 2.25% for 2012. He also reaffirmed that France would meet its public debt reduction targets no matter how the economy evolves, that is to say, a fall to 5.7% of GDP this year, to 4.6% of GDP in 2012, and to 3% of GDP in 2013. All that, without touching value added tax, “because that would be too easy.”

The French Communist Party says [1] that “France’s zero growth is not a matter of chance, but is truly the consequence of political choices.” “This outcome is their responsibility. It results from all the public monies that have been shifted to the banks and compulsive government backing of the waste caused by the financial markets, a shift of public monies that goes together with an austerity plan concocted on the basis of the General Review of Public Policies (RGPP), the non-replacement of one retiring civil servant out of two, and constant downward pressure on purchasing power.”

For Michel Sapin, the national secretary in charge of economics and tax policy for the Socialist Party, “the unprecedented austerity policy and the incoherent industrial policy have broken the economic revival without reducing government deficits. And what can be said of the actions conducted at the European and international levels? Beyond well-meaning speeches, only half-measures have been adopted and Europe is sinking into an unprecedented crisis.” [2]

[1link to the communiqué issued by the PCF, in French.

[2link to the statement by Michel Sapin.


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