FranceFrance must pursue economic reforms to redress its flagging competitiveness and can no longer rely on raising taxes to shore up public finances, as companies need fiscal stability to invest, European Central Bank President Mario Draghi said on Sunday, reports The Chicago Tribune. "Big efforts have been made, what's important is to continue on the path of reforms," Draghi told weekly newspaper Le Journal du Dimanche. "Competitiveness remains insufficient and strengthening public finances can no longer rely on tax increases."
Socialist President Francois Hollande's government has launched a reform of the pension system and overhauled rigid labor rules to stimulate hiring. But efforts to cut the public deficit have so far relied largely on tax increases. "France must regain fiscal stability so that companies can start investing again," he said. Despite reform efforts, unemployment in Europe's second largest economy is stuck at 11 percent and gross domestic product contracted 0.1 percent in the third quarter, versus 0.3 percent growth in Germany. But the Bank of France sees the economy gathering steam in the fourth quarter with growth of 0.5 percent. The Insee statistics office sees growth at 0.4 percent in the same period.
