France is lagging efforts by other euro-area countries to overhaul their economies, work that may check the region’s debt crisis, according to a study.
“France remains the only major European economy which is beset by serious health problems and has yet to do anything about it,” say the Hamburg-based Berenberg Bank and the Lisbon Council, a research institute in Brussels.
Greece and Ireland made the greatest progress in the past 12 months to trim deficits and improve competitiveness, according to the report that was released today. Estonia, Luxembourg and Germany are the three healthiest economies, the same ranking as in last year’s report. Italy moved up one place to 13th, swapping places with France. In terms of its adjustment efforts, Italy is in 7th place and France 12th.
“In the absence of additional policy mistakes, the euro crisis could fade somewhat in 2013,” according to the report’s conclusions. “The euro zone as a whole is turning into a much more balanced and potentially more dynamic economy.”
In France, President Francois Hollande’s recently announced plans to cut labor costs don’t go far enough and are partly undone by new taxes, the report’s authors say.
The report ranks the 17 members of the euro on their “fundamental health” and on their “adjustment progress.” Greece is in last place for the health of its economy, and in first place for its efforts to overcome those problems.
While Spain has improved its trade position and cut labor costs, preventing excessive austerity from leading to a Greek-style downward spiral is one of the “key tasks” for 2013, according to the report.