WASHINGTON – France was taught another basic economics lesson by the European Central Bank (ECB), which oversees the economic stability of the euro: cut spending!
Reuters reports that ECB governing council member Christian Noyer’s criticism adds to other voices that are calling for France’s Socialist government, led by Francois Hollande, to cut spending and make it a serious issue.
Standard & Poor’s, a credit ratings agency, had warned France of lowering its credit rating which could devastate investor and consumer confidence. If France does not adjust and does not cut spending, it would only worsen the country’s economic outlook as well as the Eurozone itself.
Germany cannot hold off a continent-wide recession on its own, and France is not helping its case.
Even Reuters had to admit that France’s “generous but costly welfare system”, pension and labor market reforms are needed to try to stimulate economic growth. Spain is suffering from similar circumstances, with Spaniards struggling to adjust with lower government spending.
French consumer confidence is already at a record low and the increased taxes by the Hollande government does not help in country suffering from another recession. Hollande has suffered from his lowest job approval ratings during his short presidency, and France has 10.6% unemployment rate overall.