The French economy is becoming a major drag on the Eurozone, with yesterday’s abysmal figures from its factory sector throwing fresh light on the country’s bleak political and business climate, reports City A.M.
French factories confirmed yesterday that their activity fell in November for the 21st month in a row – despite manufacturers across the Eurozone reporting the best business climate for two-and-a-half years and conditions improving very strongly in the UK and US.
“France is now the weakest link in Europe, the only major economy with serious problems that is not doing anything about them,” said Berenberg Bank’s chief economist Holger Schmieding. “The jobs market is over-regulated, and labour is far too expensive, especially for the least qualified posts. Along with high tax rates, these are an impediment to business investment too.”
He added that even Spain’s economy was likely to record a better performance: “Spain is starting to reap the benefits of its reforms – even its short term cyclical outturn is looking improved, and is likely to accelerate over the next year. Now, the longer term is starting to arrive in Spain.”
President Francois Hollande came to power on promises to boost growth and jobs, but his aggressive policies towards businesses and the wealthy have coincided with rising unemployment and periods of falling GDP.
The headline figure for Markit’s influential purchasing managers’ index (PMI) hit 51.6 for the Eurozone. Any figure above 50 suggests that the sector’s purchasing managers believe that their companies are growing.
But France’s figure was just 48.4, the lowest in five months and the worst of any major European economy.
Read more of this report from City A.M.