World Economy

OECD Calls For French Fiscal Restraint

OECD Calls For French Fiscal RestraintOECD Calls For French Fiscal Restraint

The OECD has hailed an initial French market reform package as being vital for the country’s growth prospects. But it added current measures were not enough to effectively cut state spending and reduce joblessness.

In its latest report on the French economy, the Organization for Economic Cooperation and Development (OECD) said France was in the process of implementing some crucial measures to raise the competitiveness of its industries and make the labor market more efficient, DW reported.

“The government has undertaken a series of welcome pro-growth structural reforms and has more in the pipeline,” the organization said.

The report specifically mentioned that Economy Minister Emmanuel Macron had set out a series of steps to open sectors of the economy and soften rules related to opening hours of businesses.

  Joblessness a Massive Issue

But the OECD warned current restructuring efforts were not yet sufficient. It called for better vocational training and adult qualification programs as the second-largest eurozone nation still struggled to bring down unemployment hovering around 10 percent.

At the same time, the organization called for more fiscal restraint. “Public spending, at 57 percent of gross domestic product, is among the highest in the OECD and imposes a heavy burden on economic performance,” the report said.

The OECD said it expected the French economy to expand by 1.1 percent this year, up from an earlier estimate of 0.8 percent. In 2016, it projected France would see its GDP grow by 1.7 percent, with joblessness remaining at current levels.

  Economic Bill

France’s Socialists have survived a no-confidence vote, enabling Prime Minister Manuel Valls to proceed with economic reforms he passed only by decree. He insists they’re needed to unblock France’s sluggish economy.

Detractors of Valls’ pro-business policy, mainly opposition conservatives, but also rebels within the Socialist party, failed on Thursday to muster enough votes to topple the government.

Some 234 lawmakers backed the no-confidence motion, short of the 289 votes required in France’s lower house of parliament.

Valls had forced through the bill authored by Economy Minister Emmanuel Macron on Tuesday without a direct parliamentary vote by invoking rarely used decree powers. That prompted Thursday’s opposition censure motion.

The bill frees up labor rules and includes diverse measures, including those making it easier for employers to lay off workers, to foster competition among professionals such as auctioneers and notaries, and to extend store opening hours into evenings and Sundays.

  Inflation Turns Negative

Statistics released Thursday show that inflation in France had turned negative last month for the first time since October 2009, with prices falling 0.4 percent from a year earlier.

A no-confidence vote has only succeeded once in France’s 57-year-old Fifth Republic. That was in 1962, when it was used to oust the government of Georges Pompidou.