France : falling productivity, a stagnating economy and growing debt

[Der Spiegel]

Bonjour Tristesse : France Stares into the Euro-Crisis Chasm

Falling productivity, a stagnating economy and growing debt: France's economic health leaves plenty of room for improvement. Markets have begun to notice and the country threatens to become mired in the ongoing European debt crisis.

When it comes to French economic competitiveness, Guy Maugis has a front row seat. The 58-year-old is president of the German-French Chamber of Commerce and head of Bosch France. Some 8,400 people work in the French subsidiary of the German electronics giant and Bosch France long enjoyed a cost advantage over its parent company. "But we've completely lost it in the last 10 years," says Maugis. Maugis' observations are reflected in the data as well: The French economy is losing its competitive edge. Productivity has declined dramatically and the balance of trade is chronically negative. And now the country is also being sucked into the euro crisis.
Last week, the ratings agency Moody's threatened that France's top AAA rating could be in jeopardy unless the government makes an effort to get its finances under control in the next three months. The country's national debt of €1.7 trillion ($2.3 trillion) is equal to 84.7 percent of economic output, the highest debt-to-GDP ratio of all euro member states with triple-A ratings.
The weak growth of the French economy is already insufficient to reduce the country's budget deficit to below 3 percent -- as called for by EU rules -- by 2013 as planned. The country's banks are also in trouble. All three major ratings agencies -- Moody's, Fitch and Standard & Poor's -- downgraded several top French banks not long ago, including Société Générale and Crédit Agricole.

http://www.spiegel.de/international/europe/0,1518,793645,00.html