Wednesday, February 14, 2007

Euro-zone Growth Heating Up-But France Remains Relatively Cold

Euro-zone economic growth surprised on the upside in the fourth quarter of 2006, with GDP rising 0,9% compared to the previous quarter and 3.3% on Q4 2005. Particularly previous laggards Germany and Italy surprised on the upside.

French numbers, however were not particularly strong. Indeed, year over year growth is now not only lower in France than in Spain and Germany, but lower than in Italy too. Which is pretty remarkable, given the fact that French demographics are far less dire than in Germany and Italy. Except for maybe Portugal, France is now the weakest economy in the Euro zone. I have previously explained why the French economy is so weak.

If socialist Segolene Royal is elected President, France will see an even weaker economy as she pledges to dramatically raise the already high minimum wage and increase government spending and regulation even more than Jacques Chirac.


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