France’s new prime minister – now three weeks into his job – last week unveiled a swinging austerity plan. Although the mix of measures is different than previous policy announcements, it is essentially the same thrust of economic policy aimed at limiting public deficits to win ‘business competitiveness’ and restore purchasing power to households that has been pursued for a number of years. And they are not working. Economist Christian Chavagneux explains why
Reason #1. Too much austerity kills the possibility of reducing deficits.
France has for several years followed a deliberate policy of reducing its budget deficit. It was 7.9% of gross domestic product (GDP) in 2009 and 4.3% in 2013. This policy…
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