IMF urges France to reform economy


France risks falling behind crisis-hit Italy and Spain if it does not reform its economy, the International Monetary Fund has warned, adding to pressure on French president François Hollande to stem the country’s industrial decline.

In its annual report on the French economy, the IMF called yesterday for “a comprehensive programme of structural reforms”.

The warning coincided with the release of a report by Louis Gallois, former chief executive of aerospace group Eads, who made what he called a “severe diagnosis of the decline of French industry”.

His report, commissioned by Mr Hollande, said the Socialist government should cut €30 billion, or 1.5 per cent of national output, in social welfare costs on labour within two years to “stop the decoupling” of the French economy from its competitors.

Mr Gallois put the proposal at the centre of his recommendations despite strong signals from ministers that they were reluctant to take such drastic action.

Mr Hollande, attending an Asian-European summit in Laos, said “strong decisions will be taken”. – (Copyright The Financial Times Limited 2012)