The latest economic data from France look bad. The strategy of keeping official growth forecasts high (despite the evidence) is coming under increasing pressure and there may be substantial revisions to the outlook in the pipeline – once you break through to being more honest, there is some catching up to do.
Even more worrying are the plans apparently under preparation to support the French auto industry. Officially, these plans are still under development (AP). But from what we can see, including unofficially this week, the next phase of assistance could well be even more problematic than the support provided to the US auto industry which, so far, only got a bridge loan. Continue reading
French Connection: The Eurozone Crisis Worsens Sharply
By Peter Boone and Simon Johnson
The big news is France. With sentiment worsening across Europe, France has lost its relative safe haven status – credit default swap spreads on French government debt were up sharply today.
The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place. Continue reading →
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