The euro-zone crisis has threatened to turn to France, with the shares of leading French banks suffering huge falls. Italian bank shares also decreased significantly following rumours of an imminent French downgrade or of a large French bank, Société Générale in particular, going bust. Société Générale slumped 21 per cent at one point, with Crédit Agricole down 13 per cent and BNP Paribas down 10 per cent.
The tumble is the product of growing worries about the exposure of French financial institutions to Italian debt, estimated to be some €410 billion.
Sarkozy has said his government will produce fresh measures to slash the country’s large public debt in an effort to stave off a cut to France’s AAA credit rating. Its promise to reduce the budget deficit from 7.1 per cent in 2011 to 3 per cent by 2013 will be maintained, no matter how the country’s economic situation evolves.
While credit rating agencies have said that the outlook for France remains stable, earlier predictions of growth of of 2 per cent this year and slightly higher in 2012 may turn out to be not quite so rosy after stagnation in the second quarter of this year.
Industrial production slipped by 1.6 per cent in June. If the growth predictions are not realised while deficit reduction must still be met, the revenue gap must come from somewhere: further austerity or tax rises.People’s Movement · 25 Shanowen Crescent · Dublin 9 · www.people.ie · 087 2308330 · post (at) people (dot) ie