Research Dept. News
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Monthly Report, num 312 - April 2008
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European Union - France
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France: new attempts at economic reform
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France begins 2008 in better shape than expected...
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In France, the beginning of 2008 was relatively good from an economic point of view. Household consumption recovered with growth of 3.7% year-on-year in February. That same month, consumer confidence rose by four decimals. Industrial production was up 2.7% year-on-year in January, its highest figure since last October. Exports, for which growth had stabilized between September and December, rose slightly in January. Prices have stopped showing an increase in growth rate (the February CPI was again 2.8% year-on-year). Finally, the unemployment rate is dropping going to 7.8% of the labour force, the lowest figure in 12 years.
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...but rest of year could run less brilliant course.
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So, is everything going well? The truth is that, while they refer to the winter, these indicators rather have the appearance of summer flowers. Before many months have passed the economic situation is expected to become less satisfactory. Analysts generally are expecting growth of only 1.6% in 2008, that is to say, below the 1.9% seen in 2007. But even this figure would seem overly optimistic. The French statistics body, INSEE, forecasts growth of only 1.4% in 2008, as a result of the worsening both of domestic demand and the foreign sector. Furthermore, the INSEE scenario holds as a possible risk the fact that it is based on a minimum correction in household spending.
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New round of structural economic reforms being prepared.
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In spite of the fact that the broad economic situation is showing up clubs, French president Nicolas Sarkozy is keeping to his idea of going ahead with economic reform. In this respect, Sarkozy commissioned a group headed by Jacques Attali to prepare a report on measures to improve economic growth. The outcome of this working group was a series of proposals (no less than 316) which run from liberalizing taxi licences to creating 10 key research groups. Following its presentation at the end of January, after the slight political impasse of the municipal elections, it is now expected that the French president will begin to implement a significant part of these measures.
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