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French growth to fall short again

Tuesday, March 15, 2016 - 01:24

France's economy is set to grow this year less than the 1.4 percent the European Central Bank has forecast for the broader euro zone. As Sonia Legg reports, that warning from the Bank of France governor isn't the only challenge facing the euro zone's second largest economy.

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The power of French unions is well known. And the latest demonstrations over reforms to labour laws appear to have paid dividends - for some at least. The French government has watered down promised reforms, offering concessions to the workers. (SOUNDBITE) (French) FRENCH PRIME MINISTER, MANUEL VALLS, SAYING: "We understand employees who fear their fate is in the hands of the goodwill of employers. We want to reassure them. We want to provide all guarantees that the relationship remains balanced so there is not a power struggle that works against the employees." But some fear France's economy can't afford such benevolence Economic growth has been revised down by the Bank of France. It'll fall short of the 1.5 percent economists say France needs to lower its 10 percent plus unemployment rate. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "There hasn't been any way that you can really shake the way in which production is done in France to make it more competitive and France really needs to be more competitive and without the reforms - they've been watered down very considerably now on the labour side - we just won't see that regeneration happening." It all makes the President's position even more precarious. Francois Hollande has staked his bid for re-election next year on a promise to reduce unemployment. An opinion poll two weeks ago put voter confidence in him at just 17 percent - the lowest since he was elected in 2012.

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French growth to fall short again

Tuesday, March 15, 2016 - 01:24