President Francois Hollande needs to make revamping France’s labor law and pension system a priority to revive economic growth, the European Commission said.
“France badly needs to unblock its growth potential and create jobs,” European Economic Affairs Commissioner Olli Rehn told reporters today in Brussels. The country needs to “put a renewed and strong emphasis on structural reforms in the labor market, in the pension systems, by opening up closed professions and services markets.”
The Commission said today that it expects the French economy to shrink 0.1 percent this year and grow 1.1 percent next year. The French finance ministry expects growth of 0.1 percent this year and 1.2 percent next year.
The Commission is more pessimistic because it expects weaker household demand and a bigger contraction in business investment, Rehn said.
France’s budget deficit will amount to 3.9 percent of gross domestic product this year and 4.2 percent next year if Hollande’s government doesn’t take further action, the Commission said today as part of its spring economic forecasts. Rehn said it was right to give France and Spain more time than originally planned to reduce its budget shortfall.
“For France and Spain, it is very obvious that it is more reasonable to have an extension of the correction of the excessive deficit over two years,” Rehn said.