Tentative French Labor Reform Fails To Prevent Recession

Too little, too late

France's recent reform attempts are insufficient to reverse a downward economic spiral that could marginalize a eurozone pillar and prevent further integration among member states, analysts warn.

Without comprehensive action, France's increasingly dim prospects could scare Germany into blocking eurozone burden-sharing policies needed to guard against another debt crisis.

Gross domestic product data released Wednesday underscored France's weakness, confirming it is in its third recession in four years as Q1 output fell a worse-than-expected 0.2% from Q4.

Eurozone GDP shrank for a sixth straight quarter, though the 0.2% fall was less steep than Q4's 0.6% retreat. Germany expanded by just 0.1%. Italy and Spain remain stuck in deep slumps.

The data came a day after France's parliament passed reforms meant to allow more staff and pay cuts in recessions. The changes also are aimed at discouraging short-term labor contracts .

But the reforms are seen as too little and too late, especially compared to Germany's labor liberalization a decade ago as well as efforts Spain and Italy made when the debt crisis worsened.