ORIGINAL FRENCH ARTICLE: L’austérité a ruiné la croissance des six derniers mois
by Clotilde Mathieu
Translated Saturday 23 August 2014, by
It’s no surprise that French economic growth has run out of steam. The government is revising its economic forecast and is asking Brussels for permission to let the government deficit rise. The breakdown of the economy has been confirmed.
As in the first quarter, the encephalogram of French economic growth remains stuck at zero, the national institute for statistics and economic studies (INSEE) announced with the publication on August 14 of its figures for the second quarter. The government’s forecast has had the rug pulled out under it.
In an op-ed piece published in Le Monde newspaper; the Finance Minister Michel Sapin resigned himself to admitting that France will not achieve 0.5% growth this year, as against an initial objective of 1%, and that he does not believe a figure “much higher than 1%” can be achieved in 2015. Certainly taking advantage of the disappointing results produced by the German model – German economic growth went straight into the red, dropping by 0.2% in the second quarter – Sapin put the blame on Frankfurt, the seat of the European Central Bank, and on Brussels, seat of the European Commission.
“Europe must act firmly and clearly by radically adapting its decisions to the exceptional and particular situation which our continent is experiencing. France will bring its weight to bear in this direction,” he wrote, while also demanding that “the rate of reduction of government deficit be adapted to the present economic situation.”
This is because the French government is unable to meet its deficit reduction objectives. While the minister is promising that he will not attempt to plug the new holes in his finances with tax increases, he nonetheless has not called into question either the 50-billion-euro cut in government expenditures, nor the responsibility pact.
Now, “this is no surprise,” explains Eric Aubin, the CGT’s confederation secretary. “We’ve been warning of the consequences that an austerity policy would produce. Between 2010 and 2013, purchasing power fell by 3.3% and everyone agrees that consumption is the main driving force of growth. The solutions put forward by the government, like lowering workers’ social security contributions, are just a lot of hot air.” For Aubin, the only way to avoid a catastrophe is by increating wages, minimum welfare benefits and retirement pensions. This is all the more the case as “the government has the capacity to act by raising the minimum wage, or again by triggering wage negotiations in the different sectors of the economy.”