The French economy is stagnating, with growth only in unemployment and the national debt. It will likely only hit the EU budget deficit target in 2017. Will the debt spiral continue?, reports GHN based on DW.
Criticism of France's economic policies is mounting. Katharina Pijnenburg of the German Institute for Economic Research (DIW) told DW that the French government has yet to grasp the seriousness of the economic situation.
A great deal of uncertainty currently plagues the eurozone, driven by geopolitical crises such as that in Ukraine. But, as the second-biggest economic power in the area, France's deficit hasn't helped the debt crisis. The risk that it could spiral out of control remains, said Pijnenburg, an expert on macroeconomics. The fact is that France has not had any economic growth in two years.
And yet despite this, President Francois Hollande is overseeing an expansive fiscal policy. The French government believes that more state intervention could help get the crisis under control. But Pijnenburg is skeptical, arguing that France can only get past the crisis by implementing structural reforms of its social systems and labor markets while at the same time strengthening companies and markets.
Paris has not demonstrated any willingness to reform. There is too much opposition within Hollande's Socialist Party (PS), and a restructuring of the national budget is stalled. Since 2008, the budget deficit has grown steadily and now lies above the three-percent ceiling stipulated by the EU. In 2013, the deficit rate was significantly above that level, at 4.3 percent of GDP.