by Agnes a Paris
Tue Mar 28th, 2006 at 05:27:32 AM EST
Update [2006-3-29 9:54:48 by AgnesaParis]:
It is worth mentioning that the FT would only score a silver medal in the CW category when it comes to the French economy and specifically the CPE contract.
The renown and very well-regarded ratings agency Standard & Poors published yesterday a report with some really juicy bites
France has displayed disappointing economic growth over the past three years, with GDP expansion averaging only 1.5% annually, or just slightly more than the Eurozone average. One of the big factors involved in that lackluster performance has been the low rate of labor participation. With only 70% of the working-age population actually at work, boosting the French economy without putting more of its citizens in jobs will be difficult.
Employment among the middle-age cohort of the French labor force remains high because it is virtually impossible to fire civil servants, while those in the private sector have protections almost as strong. But because of those strenuous job-protection measures, employers are simply reluctant to hire anyone in the first place, and the unemployment rate among the young is, by U.S. standards, stratospheric.
Now this report by S&P is really serious trouble.
Rating agencies very seldom comment on current affairs. They will publish a report on Russia's defaulting on sovereign debt, not on French work law. And the audience they get is much more to be taken into account than that of a newspaper, no matter how widely the FT is circulated among top management.
S&P sets the sovereign rating of almost each country in the world, and a country that has no rating can hardly tap international finance markets. France, UK, the US, like most OECD countries, are AAA rated, which is the highest rating on a AAA to D scale.
If the rating of a country is downgraded by even one notch (for France it would be AAA-, this immediately triggers investor suspicion, money fleeing the country and increases cost of government debt raising.
So yes, there is a cause for worry, much more than out of standard press twisted information.
Initial diary below the fold.
Deconstructing FT articles has become such a routine exercise that the excitement is fading away.
Unless I have missed something in the evolution of their rhetoric, they did reach a climax today voicing concerns about the French economy and calling French banks Socgen and Natexis economists to testify on the economic morass the country is allegedly headed for.
The Head of Socgen Investment and Commercial banking had to give up, much to his dismay and eventually acknowledging the fierce opposition of his teams, a project to relocate the whole investment banking staff to London. Himself lives there and would give much for people to forget he is a Frenchman altogether.
As for Natexis, a massive media campaign has been recently launched for the future 3rd European banking group (after the Natexis-Ixis merger) to be branded outside the French borders, so an interview with the FT was a much-needed measure.
I was just thinking: why don't we send these FT guys some of the beautiful graphs that have been posted on ET for them to stop spreading false ideas about a retrograde, entrenched in modernity rejection France?
Or at least get them to put such articles in the opinion section, and not the front-page as it is today.
The only informative stuff is the results of a poll already published by le Monde - at least they quote the source - and an estimate of the direct impact of today's strikes on GDP: 0.1 to 0.2%, that is worth mentioning indeed!...
An Ipsos opinion poll in today's Le Monde shows 63 per cent want the prime minister to back down on labour reform. But most rightwing voters still support him, with 74 per cent of the ruling UMP party's supporters backing him to stand firm.
Ground-breaking news indeed.
The bulk of the article is a patchwork of sentences quoted out of context. I propose FT for the award of Best Conventional Wisdom newspaper.
The opinion articles in the Editor's choice at The FT.com are more appealling with catchy titles like "How French unions could find themselves irrelevant" or "France must change or live in fear" Rien que ça !
The Financial Times outlook on France : plus ça change, plus c'est la même chose
