A stagnant economy, a weak President and a jump in car burnings are all signs of a looming crisis in France that is threatening to drive the eurozone’s problems to a “higher plane”, according to London hedge fund chief Michael Hintze, reports The Telegraph.
The billionaire boss of CQS, one of London’s biggest hedge funds, has written to investors warning them that the France could trigger another more dangerous phase of the debt crisis and rock the fragile global recovery.
In a note to investors, Mr Hintze has said: “While Cyprus has stolen the news headlines of late, I am concerned that the eurozone’s problems could soon turn to the ‘core’, and in particular the focus could be on France.”
He added: “A loss of confidence in France would shift the eurozone’s troubles to a higher plane. France lies not only at the core of the eurozone, but is also one of the original architects of the European Union. Clearly, a loss in confidence in France would likely have far-reaching consequences; its impact on the EU, the broader global economy and markets.”
France, which yesterday was shown to have plunged back into recession, represents 19.6pc of eurozone GDP and 14.4pc of European Union GDP. Its share of the European Central Bank’s capital is 14.2pc.
Mr Hintze, a Tory donor and leading philanthropist, said that rising social unrest, especially among young people, could hamper the French government’s ability to push through “deeper economic reforms that are required.”
“A reflection of growing discontent among the youth can be seen in the rise in car burnings,” Mr Hintze has said in a note to investors. “Figures released by the French Minister of the Interior recorded 1193 cars having been burned over a two-day period on New Year’s Eve and New Year’s Day, with the annual number somewhere around 42,000 to 60,000.”
The discontent, which is being fuelled by rising unemployment, is leading to a “strong revival” in smaller political parties, including the National Front, he argued. Meanwhile, the approval rating of President Francois Hollande has crashed from 61pc at his election a year ago to 27pc today.
As a result France, which desperate needs economic reforms, could languish in political paralysis instead.
Read more of this report from The Telegraph.