Macron`s economic "program" is not credible. His hands are completely tied. There is nothing he can do, but the French media and the elite that support him are sweeping all that under the rug.
Things are very clear, though. France`s credit costs and terms of trade are set by the European Central Bank. Tax and public spending decisions are framed in a tight corset imposed by budget deficit limits of the monetary union. And the fiscal policy is jointly supervised and sanctioned by the EU Commission and the Eurogroup — a forum of the euro area finance ministers under Germany`s thumb.
France has been overshooting its deficit limits since 2008. But it now seems impolitic in the extreme to even mention that France has to deliver a socially and politically flammable fiscal austerity in a stagnant economy with a jobless rate of 10 percent.
The latest numbers on economic activity released last week show a slowdown to a quarterly growth rate of 0.3 percent in the first three months of this year (from 0.5 percent in the fourth quarter of last year) as a result of flat consumer spending and a deteriorating trade balance. That slowdown implies an implausible assumption of steadily accelerating aggregate demand for the rest of the year to hit the official growth target of 1.3 percent in 2017 (compared with 1.
0 comments:
Post a Comment