IMF warns over-taxed France risks slipping behind Italy and Spain
Baku, November 6 (AZERTAC). The International Monetary Fund has told France to take urgent measures to head off national economic decline, warning that the country risks being left behind as southern Europe embraces reform.
Throwing the guantlet at the feet of the Socialist president Francois Hollande, the IMF said rising tax rates are undermining France as a place "to work and invest" and leading to a "significant loss of competitiveness".
"There is a risk it will get worse if France does not adapt at the same pace as its trading partners in Europe, notably Italy and Spain," it said.
The IMF challenge had an added piquancy coming from a body headed by France's Christine Lagarde, widely touted as the next Gaulliste leader and a future rival for the French presidency.
The warning came as French industrialist Louis Gallois delivered a long-awaited report to Mr Hollande calling for "shock therapy" to stop the national rot, with drastic cuts in business payroll taxes to claw back loss ground against Germany and other EMU states.
Mr Gallois, ex-head of the EADS aerospace group and a revered figure in France, said all parties need to unite in a patriotic push to save the nation.
France’s share of world exports has fallen to 3pc from 6.3pc in 1990, losing ground against Spain, Beglium, and Holland, as well as Germany. The trade balance has switched from surplus of 2.5pc of GDP to a deficit of 2.4pc over the last twelve years.
While Germany squeezed wages in the early EMU years to gain an edge, France let unit labour costs ratchet upwards to €35.30 an hour. This is now 10pc above German levels. The IMF said much of French industry is in "low to medium-tech products" that face rivals in Asia.
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