Brussels swipes at France over economic ‘vulnerabilities’

The European Commission took a swipe at France noting the country’s economic “vulnerabilities” due to high public debt and weak competitiveness.

The comments from Brussels came in a commission report to the European Parliament assessing 2019 economic and social development in the European Union.

“France is experiencing imbalances,” the report said. “Vulnerabilities stem from high public debt and weak competitiveness dynamics in a context of low productivity growth.”

Public debt

Brussels said France’s public debt, at 98.5 percent of GDP, was forecast to “recede only marginally” and that “reduces the fiscal space available to respond to future shocks and weighs on growth prospects”.

The commission expects France’s economy to register growth of 1.3 percent in 2019, compared with previous expectations of 1.6 percent.

Despite progress in labor laws, taxation and business environment, the report said “the effects of these reforms still have to fully materialize.”

France’s public deficit should hit 3.2 percent in 2019 - beyond the threshold of 3 percent set by European rules, but EU officials see this as transitory so France is unlikely to face EU procedures for a violation.

The deficit has been impacted by a reduction in taxes and other measures put in place to ease protests by the “yellow vest” anti-government movement.

The commission is scheduled to formally assess the French economy after the European elections in May.