French Economy Receives a Slight Boost for 2015

April 7, 2015Franceby EW News Desk Team

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According to analyst predictions, France's economy will pick up speed in the first half of 2015, but unemployment will remain high. The economy expects to grow .04 percent in the first quarter and .03 percent in the second quarter.

If all goes well, the French anticipate one-percent growth over the course of the year, considered an unattainable feat a few months back. Business confidence increased as the French economy gains momentum, but an annual growth rate of at least 1.5 percent per year is necessary for driving down unemployment numbers. President Francois Hollande vowed he would not seek another term in 2017 if the unemployment rate does not lower. The president has quite a bit of work ahead because unemployment remains at 10.7 percent, which is the highest level in 20 years. Hollande, who campaigned on a platform of job creation instead of austerity, has failed to foster a strong atmosphere of job creation.

France's High Tax Policies

Hollande announced a variety of measures to boost the economy, but the problem is that his administration seems to be engaging in trial and error, inspiring little confidence from the business community, and hampering job creation. In addition, the nation's high tax rates have been an impendent to the economy. His cabinet focused more on increasing taxes rather than lowering spending, further driving down business confidence. Hollande vowed to amend the tax system so businesses and investors can thrive in a more favorable business environment, but many companies and entrepreneurs are making a hasty retreat from France, and authorities have a long way to go when it comes to drawing in further investment. France has a history of charging some of the highest tax rates in the European Union. Rating firm S&P has also expressed concerns over the nation's competitiveness with other nations in the Eurozone.

Eurozone Rescue Package Inspires Hollande

In early 2015, the European Central Bank announced a $1.3 trillion stimulus package to get the Eurozone out of economic decay, but experts specifically named France and Italy as nations that need to work the hardest in becoming more competitive to benefit from the program. External factors are also at play, such as Germany, which is part of the reason why France's economy has not been able to prosper. For instance, Germans are getting by on a high export market and low domestic demand, which does not bode well for other Eurozone nations that need exports to boost economic activity. This is an added problem for Hollande, who also promised increased exports and manufacturing during his campaign, but his government will have to be more creative if France aspires to be more like Germany.

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