France's Socialist Government Told To Slash Spending
The French government has been told by the country's national auditor, the Cour des Comptes, that it must slash public spending. The Cour des Comptes has projected that France will exceed its deficit target of 3.7 percent for 2013.
From the BBC:
Francois Hollande's government aims to reduce public spending by 13bn euros in 2014 and 15bn euros in 2015 by cutting state aid and local government budgets.But the influential Cour des Comptes said this was not enough."(France's) deficits remain higher than the eurozone and European Union average. There must be no slackening in this effort and the focus from now on must be on spending," the body said.
The French government spends 56 percent of GDP, making it one the highest spending governments in the European Union. France's vast public sector and punitively high tax rates have lead to a situation where growth is forecast at a pitiful 0.1 percent. Since President Francois Hollande was elected to office in 2012 his government's policies toward the private sector have been close to vindictive. From attempts to introduce a 75 percent tax rate on the rich to petulant threats of nationalization against entrepreneurs. Private industry and wealth creation have been alien concepts to the socialist administration.
While many Eurozone countries have endeavoured to reduce the size of their public sectors France has taken a typically leisurely attitude toward the pace of deficit reduction. The European Commission has already granted France a two-year extension to reduce its deficit to under 3 percent of GDP.
Public sector largesse and some of the most burdensome labour market regulations anywhere on the continent have left France not with a social democratic paradise but unemployment in the first quarter of 2012 at a staggering 10.8 percent. There was further bad news for the beleaguered socialist government as consumer confidence hit a miserable low of 78 points, significantly short of the long term average of 100.
Hollande, whose election was hailed as the beginning of the fightback against austerity has not managed to be the savior which European socialists had hoped for. Instead, he has presided over an endless list of economic failures inflicted upon the French population. Despite this Hollande has had the hubris to declare the Euro crisis over. Hollande's declaration will be of little comfort to the 24 percent of young people unemployed across Europe.
The latest warning from the Cour des Comptes should be a clear sign that spending not austerity is the problem. In Europe's second largest economy austerity has not even begun.