The worsening economic situation in France has prompted an IMF warning of a “negative spiral of low growth and falling inflation”.
As it is, the country could well fall back into recession. The IMF slashed its growth forecast this year from 1% to 0.7%, pointing out the risk of a stalled recovery which could take years to overcome.
The situation is serious as France is the world’s fifth largest economy and, along with Germany, it has been a major driver of the eurozone’s fortunes.
Unemployment in France is running at 10.10%. In April 2014 it reached a new record high of 3.364 million people.
The IMF has warned there would be no “appreciable decline” in the rate until 2016.
Core inflation in May was 0.3% which is increasing real borrowing costs and inhibiting investment.
President Hollande has been criticised for relying on tax increases without spending cuts. Citizens have accepted austerity measures through gritted teeth, and more measures are on the way which will see cuts of €50bn by 2017.
