FRANÇOIS FILLON, the French prime minister, called on Europe to co-ordinate its response to the euro zone's growing economic malaise yesterday after holding an emergency session of his own ministers to examine measures to deal with France's faltering consumer confidence.
Mr Fillon said there was no need to relaunch France's stuttering economy. He said investing more public money would "solve no purpose" - the only answer was to continue with structural reform. But as France holds the presidency of the EU, Christine Lagarde, the finance minister, will propose measures that could be tabled at the next meeting of EU finance ministers on September 12th and 13th in Nice.
"We have a common economic area, a common currency," Mr Fillon said. He said co-ordination was "indispensable". This comes after the euro zone in the second quarter saw the first contraction in gross domestic product growth since the creation of the single currency. Mr Fillon cut short his holiday and called back the five ministers with economic portfolios after Insee, the official statistics office, reported a surprise contraction in the French economy during the second quarter.
Against expectations of a marginal rate of growth for the second three months, Insee said GDP had contracted by 0.3 per cent, and revised its estimate for first- quarter growth from 0.6 per cent to 0.4 per cent. The Bank of France indicated little hope of an improvement in coming months with an estimate for GDP growth of 0.1 per cent for the third quarter.
The worse than expected performance has put the government's target of 1.7 per cent growth for this year in jeopardy and, as a consequence, its hopes of keeping the budget deficit at 2.5 per cent of GDP for 2008. But Mr Fillon insisted France could still meet its deficit goal, although next year's target could be reviewed.
- (Financial Times service)
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