French fury at Economist cover story

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

Cover picture of The Economist's 17 November issue.
Cover picture of The Economist's 17 November issue. Photo: The Economist

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.