Allez La France
Well well ... amidst my pessimist views on the Eurozone it is difficult not to feel a wee bit optimistic by looking at France and how the latest data on unemployment seems to be heading in the right direction.
A rebound in France’s economy is creating jobs at the fastest rate in five years, giving a fillip to the government’s push to cut the country’s crippling unemployment rate before next year’s elections.
The upbeat French employment data followed gross domestic product figures earlier this week showing that the 12-country eurozone grew by 0.9 per cent in the second quarter of this year – faster than the US. They showed that “the eurozone is now creating jobs at a faster rate than in the US,” according Holger Schmieding, economist at Bank of America.
Still the unemployment rate is flirting with the two digit mark ... oh and remember that elections are coming up.
If, as economists expect, the positive trends continue, it will boost the government’s goal of cutting unemployment from its current 9 per cent level to around 8 per cent by next May, when the country goes to the polls.
This could help salvage a positive not from the beleaguered record of Jacques Chirac’s presidency. It is also likely to favour Nicolas Sarkozy, interior minister, who is widely tipped to succeed Mr Chirac as the centre-right UMP party’s main presidential candidate in next year’s ballot.
Véronique Riches-Flores, economist at Société Générale, said she was likely to raise her forecast for French economic growth from 2 per cent to 2.2-2.3 per cent on the back of the figures.
So how on earth can I still maintain my boring and pessimistic view here? Well, the fundamentals have not changed ... the ECB is still hawkish and big budget deficits still have to be contained according to the criteria for membership. Coupled with a US slowdown I just do not see how things really are different although the signs are definitely there that something might be changing.