What is happening with France?

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"A growth failure in France would have significant spillovers to its neighbors, particularly small, open economies in the euro area and smaller but still measurable impacts on Italy and Spain" 
- International Monetary Fund 

While French First Lady awaits a clarification of her status from Francois Hollande, who was alleged in love affair with an actress, market participants are focusing on this week's Hollande's speech where he can announce some changes in his political and economic spots. 

European economy is stabilizing, with even Southern economies showing some signs of revival; however, the spotlight has now swung to the continent's second-largest economy– France. After suffering from three recessions in five years, France is still struggling to grow, as growth stagnated in the third quarter, jobless rate hit 10.9%, compared with 7.8% in 2010, while current account persistently remains in deficit. In such a case the nation needs a strong leader, while Hollande is widely regarded both in France and abroad as a weak one, who lacks the charisma to drive the economy back to prosperity. Meanwhile, his approval rating plunged to a historic low of just 15%. Hollande's widely discussed 75% tax on high earners only reinforces concerns the country is overtaxed, overregulated and remains hostile to wealth people. As to the outlook, the debt-to-GDP ratio is projected to propel to 96.2% this year, the growth should be at least 3%, while some analysts believe the real expansion will be just around 1.2%. Until Mr. Hollande changes his views radically, investors and businesses will be showing little willingness to invest money into France. 

© Dukascopy Bank SA

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