Austerity threatens French recovery, jobs: think tank

22nd October 2010, Comments 0 comments

Austerity measures threaten to hinder France's economic recovery and lead to a further increase in unemployment, a think tank warned Friday.

"The austerity measures will prevent the triggering of a virtuous cycle allowing the French economy to grow at a rate higher than its potential and therefore allowing unemployemnt to fall," the OFCE economic research centre of Paris' elite Sciences Po university said in a report.

The think tank expects the French economy will manage 1.7 percent growth this year, slipping to 1.6 percent in 2011 as austerity measures kick in.

The French government forecasts 1.5 percent growth this year 2.0 percent growth in 2011.

The OFCE said it expected the unemployment rate will rise to 9.7 percent of the workforce at the end of 2011, against 9.4 percent at the end of this year.

"The growth will be less rich in jobs, even destructive in jobs," said economist Eric Heyer in presenting the think tanks' forecasts.

The government's employment minister, Laurent Wauquiez, has pledged to bring unemployment under nine percent by the end of 2011.

Last month the French government proposed a budget with the toughest cuts in 50 years.

© 2010 AFP

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