The urgent message of this austerity-fuelled recession

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Like the rest of the eurozone countries, France is entering a recession, according to the latest quarterly report released this month by the French National Institute for Statistics and Economic Studies (INSEE). Mediapart co-founder Laurent Mauduit argues here why the INSEE report is both an indictment of President Nicolas Sarkozy's economic policies and a warning for the Left opposition, ahead of next year's presidential elections, that austerity measures do nothing but fuel the crisis.

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Like the rest of the eurozone countries, France is entering a recession, according to the latest quarterly report released this month by the French National Institute for Statistics and Economic Studies (INSEE). Mediapart co-founder Laurent Mauduit argues here why the INSEE report is both an indictment of President Nicolas Sarkozy's economic policies and a warning for the Left opposition, ahead of next year's presidential elections, that austerity measures do nothing but fuel the crisis.  

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The French National Institute for Statistics and Economic Studies (INSEE) published its latest Quarterly Report, Conjuncture in France, on December 15th, and it makes for solemn reading. It addresses a wake-up call to the whole of Europe as well as to France, for it warns that a recession is thundering down upon us, with all its weight of social misery, while an economic depression has already arrived, with a collapse of employment, falling purchasing power and soaring unemployment.

As an overture to the presidential campaign, with France on the verge of losing the triple-A credit rating it is currently awarded by financial rating agencies, the INSEE report serves as a double warning, both to President Nicolas Sarkozy and all the candidates in next year's French presidential elections [1].

Firstly, for the Right: is it not urgent to suspend economic policies that have driven the whole of Europe, especially France, into a quagmire and which now put it under the tyranny of financial markets and of rating agencies?

Then for the Left, and the Socialist Party in particular: with an economic situation this bad, is it not time to clearly shake off the recessive policies developed in Europe and show a little more daring? Is it not time to call for stronger measures against speculation and to recommend a true strategy for growth?

To sum up the study, INSEE has chosen a euphemistic title: ‘The eurozone marking time'. The truth underlying the figures published by INSEE is actually much clearer than that, for it clearly establishes that the accumulation of austerity plans in all European countries is tipping the continent into a true and straightforward recession.

The report's figures show that the gross domestic product (GDP, used to measure growth) of the eurozone should recede by -0.3% in the last quarter of 2011 before falling another -0.1% in the first quarter of 2012 and is expected to remain flat (0%) in the second quarter.

 

Economists consider that an economy is in recession when GDP falls for at least two consecutive quarters. The truth, simply, is that in Europe, the recession has begun. It could continue into 2012, and even worsen, because of the ample uncertainties linked to forecasting at this time. Depending on the rhythm at which the rating agencies proceed in the coming weeks, and the pace of continued belt tightening in Europe in the coming months, it is probable that the scenario will be darker than that forecast by INSEE.

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1: The first round of voting in the French presidential election is on April 22nd, after which the two highest-scoring candidates will move on to a final, decisive second round on May 6th.

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