France's economic woes overshadow election

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France's economic woes overshadow election

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The state of France’s economy tops the list of voter concerns in the presidential election.

Both the candidates in the second round – Socialist Francois Hollande and incumbent conservative Nicholas Sarkozy – are promising to balance the budget.

Whoever wins will face hard choices, but the financial markets remain sanguine.

Paris was able to easily sell almost eight billion euros worth of government bonds just four days before the first round of voting.

However, commentator Jean-Marc Vittori, an editorial writer with the newspaper Les Echos, said things will have to change: “France has a debt and deficit problem, but it is less serious that in Greece, because France never lied about it finances, it’s less serious than in Italy because the French debt is much lower, and it’s less serious than in Spain because the deficit has not exploded as it did in Spain. But France does have a real public debt problem based on not being able to control its public spending.”

France’s economic growth for this year is predicted to be just 0.5 percent, much weaker than last year’s 1.7 percent. Debt amounts to a relatively high 85.8 percent of the country’s gross domestic product and with unemployment at 10 percent of the workforce fewer people are paying income tax.

Also reducing the tax base is the fact that more companies are moving production abroad – as Renault recently did with a factory in Morocco.

Against that background whoever wins will have to introduce austerity measures though that word has not been uttered by the candidates.