Bad news: Yeah, France is probably falling back into recession

Their triumphant return to positive economic (if only just) earlier this year was met with plenty of self-congratulatory optimism on which Socialist President Hollande’s government proclaimed they were fairly confident they’d be able to build, but interestingly enough, it seems that their high-tax, high-regulatory regime is in fact preventing them from making any additional progress (weird, right?). Earlier this week, we learned that the euro economy grew by “less than expected” at a mere 0.1 percent, while France’s economy contracted by a tenth of a point. Now, more bad news in the form of slackened businesses activity and weakened consumer confidence across the zone in general and in certain places especially:

Hopes that the euro zone could be emerging from years of torpor suffered another setback on Thursday when an indicator of economic activity in the region slipped unexpectedly and suggested that France could be sliding back into recession.

The indicator, a survey of purchasing managers published by the research firm Markit, fell to 51.5 in November from 51.9 in October, according to preliminary data, as the decline in France offset further improvement in Germany. Economists had expected the composite index for the euro zone, which tracks both manufacturing and service sectors, to rise to 52, according to Barclays.

A reading above 50 is considered a sign that the euro zone economy is growing. But the index for France fell to 48.5 in November from 50.5 in October, the latest sign of shrinkage in the French economy…

Over all, the survey data suggested that, even though the euro zone as a whole pulled out of recession in the second quarter of this year, the recovery lacks momentum and is vulnerable to shocks, such as a sag in demand from China and other emerging markets.

“Any improvements were largely confined to Germany,” said Chris Williamson, chief economist at Markit. “France, on the other hand, showed further signs of being the ‘sick man of Europe.’ ”

Seeing as how France’s is the second-largest economy in the eurozone, it would be tough for the bloc to overcome France’s faltering ‘recovery,’ but it isn’t like the rest of the eurozone is doing too hot, either. Much of the bloc is struggling beneath the weight of their ongoing fiscal and economic woes, and the folly of the rigid regulations that exacerbates them, too:

A lost generation of jobless youth in the eurozone could tear the single currency apart if nothing is done to address chronic levels of unemployment, the World Economic Forum (WEF) has warned. …

John Lipsky, who served as acting managing director of the International Monetary Fund during the height of the Greek crisis in 2011, said the problem was likely to get worse before it got better.

Mr Lipsky, who contributed to the WEF report, said rigid labour laws meant existing workers were offered more attractive employment rights than their younger counterparts.

“We all know it’s true that if it’s easier to dismiss a worker when things don’t work out, that makes you more willing to take a chance on hiring somebody,” he said.

“I myself have had the experience of finding that restrictive practices make you very reluctant to take on the burden of an employee unless you’re absolutely sure that you can sustain them.”

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