EU warns France to get to grips with 'major challenge' of debt
The European Commission singled out France on Wednesday for some harsh warnings over serious public sector debt levels that could prove the Achilles heel for the entire eurozone.
As Socialist French President Francois Hollande seeks an extra year to meet EU deficit targets, a detailed report on significant macroeconomic imbalances across the bloc highlighted long-term problems Paris needs to address.
France's public debt "represents a vulnerability, not only for the country itself but also for the euro area as a whole," the report said.
The debt in 2012 was pegged at 90.3 percent of gross domestic product, above the EU average and half as much again as the notional 60-percent limit.
With the eurozone economy facing continued recession this year, that represents "a major challenge that France still needs to address," the commission said.
As Brussels presses for greater reforms, EU Economic Affairs Commissioner Olli Rehn stressed the importance of France to the 17-nation eurozone.
"France is a core country -- in terms of its size and its geo-economic position," Rehn said. "Its health has a very direct impact on the overall health of the eurozone."
The Commission report said "the resilience of the country to external shocks is diminishing and its medium-term growth prospects are increasingly hampered by longstanding imbalances."
Citing a slump in export strength, "rigidities" in labour laws and the lowest profitability of companies in the euro area, it said that "high and increasing public debt is reducing the capacity of public finances to face potential adverse shocks and could result in negative spillovers to the whole economy."
© 2013 AFP