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French fury at Economist cover story

Officials defend the “time-bomb at the heart of Europe”.

French officials accused the The Economist of sensationalism today after the newspaper ran a cover story outlining the profound weaknesses in the French economy under President François Hollande.

The British weekly chastised Hollande’s economic reforms for lacking ambition and scope, warning that the stagnant French economy could bring the euro to implosion as would-be investors lose faith in the eurozone’s second largest economy:

“Our most recent special report on a big European country (in June 2011) focused on Italy’s failure to reform under Silvio Berlusconi; by the end of the year he was out—and change had begun. So far investors have been indulgent of France; indeed, long-term interest rates have fallen a bit. But sooner or later the centime will drop. You cannot defy economics for long.”

Speaking to Europe 1 Radio, French Industry Minister Arnaud Montebourg moved swiftly to rubbish the speculation:

“Honestly, The Economist has never distinguished itself by its sense of even-handendess”, he said.

“It is the Charlie Hebdo of the City”, he added in reference to the French weekly criticised for publishing inflammatory cartoons of a naked Prophet Mohammad.

Prime Minister Jean-Marc Ayrault followed suit, expressing his outrage on French TV station i>tele:

“You are talking about a newspaper which is resorting to excess to sell paper. I can tell you that France is not at all impressed”.

John Peet, The Economist’s Europe editor who penned the report, defended the magazine in an interview with newspaper 20 Minutes:

“The point of this cover is to encourage France … Other countries including Greece and Portugal have conducted many reforms. This is not yet the case in France”.

France’s public debt hit 90 per cent of GDP this year, with many sceptics doubting Hollande’s ability to trim the 2013 deficit to 3 per cent of output.

Meanwhile, unemployment in France has risen to a 17-year high, with a quarter of 18 to 24-year-olds unable to find work.

Holland has faced plunging popularity ratings since his election as he struggles to invigorate an uncompetitive French economy with sluggish growth prospects.

His deficit-cutting measures are primarily made up of tax increases, which have been roundly criticised for stifling business investment, culiminating in opposition from “Les Pigeons” – a collective of entrepreneurs that vehemently oppose hikes in French corporation tax.

Moody’s, a rating agency, is due to review France’s credit rating this month, which has led analysts to believe that the country could face another downgrade after Stand & Poor’s took away France’s AAA- rating in January.

France narrowly avoided recession on Thursday, when data showed unexpected that the economy had managed to eke out 0.2 per cent growth in the third quarter.

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.