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[Link niet meer beschikbaar]The euro crisis no one is talking about: France is in free fall
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France president Francois Hollande
The euro zone's second-largest economy is suffering more than any other member from a shocking deterioration in competitiveness. And it's doing nothing to stop it.
FORTUNE -- Given investors' confidence in its sovereign debt, and its image as Germany's principal partner in the sturdy, sensible "northern" eurozone, you'd think that France endures as the co-guardian of the endangered single currency. Indeed, the rate on France's ten-year government bonds stands at just 2%, just a few ticks above Germany's. From a quick look at the headline numbers, France doesn't appear nearly as stressed as the derisively titled "PIIGS," Portugal, Ireland, Italy, Greece and Spain. So far, the trajectory of its debts and deficits isn't as distressing as the figures for the PIIGs, or even the U.K. and the U.S.
France's vaunted role in the creation and initial success of the euro enhances its aura of solidity. It was President Francois Mitterrand who in 1989 persuaded Chancellor Helmut Kohl to back monetary union in exchange for France's support for German reunification. In fact, France and Germany, along with the Netherlands, dramatized their commitment by effectively uniting the franc and deutschemark in a currency union that held their exchange rates in a narrow band, and heralded the euro's birth in 1999. In the boom years of the mid-2000s, France virtually matched Germany as the twin growth engine of the thriving, 17-nation eurozone.
A deeper look shows that France is mired in no less than an economic crisis. The eurozone's second-largest economy (2012 GDP: 2 trillion euros) is suffering more than any other member from a shocking deterioration in competitiveness. Put simply, France's products -- its cars, steel, clothing, electronics -- cost far too much to produce compared with competing goods both from Asia and its European neighbors, including not just Germany but even Spain and Italy. That's causing a sharp and accelerating fall in its exports, and a significant decline in manufacturing and the services that support it.
The virtual implosion of French industry is overlooked by analysts and pundits who claim that the eurozone had dodged disaster and entered a new, durable period of stability. In fact, it's France -- not Greece or Spain -- that now poses the greatest threat to the euro's survival. France epitomizes the real problem with the single currency: The inability of nations with high and rising production costs to adjust their currencies so that their products remain competitive in world markets.
So far, the worries over the euro have centered on dangerously rising debt and deficits. But those fiscal problems are primarily the result of a loss of competitiveness. When products cost too much to make, the economy stalls or actually declines, so that even modest increases in government spending swamp nations with big budget shortfalls and excessive borrowings. In this no-or-negative growth scenario, the picture is usually the same: The private economy shrinks while government keeps expanding.
That's already happened in Italy, Spain and other troubled eurozone members. The difference is that those nations are adopting structural reforms to restore their competitiveness. France is doing nothing of the kind. Hence, its yawning competitiveness gap will soon create a fiscal crisis. It's absolutely astonishing that an economy so large, and so widely respected, can be unraveling so quickly.
The world's investors and the euro zone optimists should awaken to the danger posed by France. La crise est arivée.
Samenvatting: competitiviteit van Frankrijk gaat sterk achteruit en is slechter dan omliggende landen. Productiekosten liggen te hoog wat de export schaadt. Analisten houden te weinig rekening met de problemen in Frankrijk en doen alsof het land stabiel is terwijl niets minder waar is. Omdat Frankrijk de tweede grootste economie in Europa is, vormt het land eigenlijk een groter gevaar voor het overleven van de euro dan landen die vaker in het nieuws komen.
Volgens de schrijver van het artikel toont Frankrijk aan wat het probleem is met de euro als eenheidsmunt: landen met hogere productiekosten hangen vast aan de euro wat hun minder competitief maakt in de wereldeconomie.
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Mijn commentaar op het artikel: hoewel de schrijver in grote lijnen correcte vaststellingen doet, vergeet hij te vermelden dat een belangrijke oorzaak van een gebrek aan competitiviteit bij leden van de eurozone een gevolg is van de enorme bureaucratie en regulering vanuit de EU, bovenop de bestaande remmende nationale politiek van die landen die het al economisch moeilijker hebben. De euro als eenheidsmunt heeft zowel voordelen als nadelen: het kan de handel tussen leden van de eurozone makkelijker maken, maar tegelijkertijd vormt de euro een obstakel voor landen die er economisch minder voordeel uit halen.
Het is in elk geval duidelijk dat de eurocrisis nog lang niet voorbij is.