Brussels turned up the pressure on the French government to overhaul the country’s sputtering economy more quickly, issuing a stinging report on Wednesday that argues President François Hollande’s reform efforts thus far have been insufficient to restore the country’s competitiveness, reports The Financial Times.
The report, one of 13 issued on the EU’s most troubled countries outside the four in full-scale bailouts, warned that France’s shrinking share of global exports and diminishing growth prospects are likely to continue unless more is done to make the country’s labour market more flexible.
In addition, it warned France’s increasing sovereign debt levels, which are expected to rise to 93.8 per cent of economic output next year, are not only choking off growth prospects but are threatening the country’s banking system and the broader European economy.
“France’s public sector indebtedness represents a vulnerability, not only for the country itself, but also for the euro area as a whole,” the report states.
The annual reports are part of new post-eurozone crisis powers given to the European Commission, the EU’s executive branch, to identify and put pressure on EU countries where their economies are most vulnerable.
Although the reports on other vulnerable eurozone countries such as Spain and Italy contain similar warnings, the stark evaluation of France’s economic difficulties stands out because Paris has not normally been lumped in with the region’s “peripheral” economies.
Read more of this report from The Financial Times.