France's inability to make rapid adjustments to its economy is a serious concern and should be ringing alarm bells for the euro zone, according to a study examining the health of the 17 countries that share the single currency.
The report by the Lisbon Council ranked France 13th out of 17 for its overall health, including its growth potential, employment rate and consumption, and 15th for its progress on economic adjustments, particularly on reducing its budget deficit and keeping a lid on unit labor costs.
The report will fuel concerns that France risks going the same way as Italy, Spain, Greece, Ireland and Portugal, all of whom have faced intense financial market pressure and seen their borrowing costs soar to unsustainable levels.
The yield on French 10-year government bonds rose to 3.46 percent on Monday, a spread of 163 basis points over benchmark German Bunds -- a near record in the lifetime of the euro.
"Among the six euro zone countries with a AAA rating, France achieves by far the lowest ranking in the study's fundamental health check," the Brussels-based think tank found in the 75-page report, called the Euro Plus Monitor.
"The results are too mediocre for a country that wants to safeguard its place in the top league... Alarm bells should be ringing for France."
http://www.moneynews.com/FinanceNews/france-euro-lisboncouncil/2011/11/14/id/418007
Tuesday, 15 November 2011
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