French government ‘disarray’ in face of an alarming economic scenario

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Just before French government members left on their two-week summer holidays earlier this month, they met with President François Hollande for a confidential seminar in which they were presented with an alarming set of economic figures and forecasts that promise dark times when they return to work on August 18th. The deflationist spiral into which Europe is being drawn threatens to destroy all hope of France recovering growth, reducing already chronic unemployment, or of straightening its public accounts. Just as worryingly, the government appears divided and dithering over the policy direction to be adopted to avoid what some business leaders predict could become a new and catastrophic crisis by 2015. Mediapart’s economic and business affairs correspondent Martine Orange reports.

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It was a warning of the danger to come. “There is a real deflationist threat in Europe,” President François Hollande said in an interview with French daily Le Monde earlier this month. “In France, inflation has never been so low.” Two days earlier, on August 1st, a French government pre-summer break seminar at the Elysée Palace was presented with depressing economic forecasts, and it was as if Hollande felt the need to publicly flag up, without delay, that the ground was crumbling below his feet.