PARIS (Reuters) - French officials angrily rejected a charge by Britain’s The Economist weekly on Friday that France was the “time-bomb at the heart of Europe” and a danger to the euro single currency, accusing the magazine of sensationalism.
The Economist’s front cover showed seven loafs of “baguette” bread bound together by a French tricolour with a lit fuse protruding from the centre.
Its main article raised concerns that President Francois Hollande’s economic reforms are not ambitious enough, warning that financial markets could turn against France, and so could jeopardise the future of the euro.
“Honestly, The Economist has never distinguished itself by its sense of even-handedness,” Industry Minister Arnaud Montebourg told Europe 1 radio.
“It is the Charlie Hebdo of the City,” he said, referring to a French satirical weekly which in September drew international criticism for publishing cartoons depicting a naked Prophet Mohammad.
Aside from doubts over the scale of its reform efforts, many economists and EU officials are sceptical that Hollande’s Socialist government can hit its target of cutting its public deficit to 3 percent of output to 2013 as promised.
Failure to do so could prompt financial markets to demand higher yields for its bonds, which are currently held around record lows of two percent on the perception that France is, a long with Germany, a safe haven in the euro zone.
Yet French public spending accounts for 56 percent of gross domestic product, the highest level in the euro zone, and public debt reached 90 percent of GDP this year. Hollande’s deficit-cutting strategy is based on two-thirds tax increases, much of it on businesses, and one-third spending cuts.
The Economist’s Europe editor, who wrote the special report, defended the weekly against accusations of being unfair towards France. Two previous cover stories this year accused France of being in denial about economic reality and called Hollande “rather dangerous”, endorsing his presidential election opponent, conservative incumbent Nicolas Sarkozy.
“The point of this cover and the article is to encourage France,” John Peet told the newspaper 20 Minutes. “Other countries including Greece and Portugal have conducted many reforms. This is not yet the case in France.”
Prime Minister Jean-Marc Ayrault, who on Thursday travelled to Berlin to explain France’s efforts to boost its declining international competitiveness to Chancellor Angela Merkel, also denounced the cover.
“You are talking about a newspaper which is resorting to excess to sell paper. I can tell you that France is not at all impressed,” he told French TV station i>tele late on Thursday.
Laurence Parisot, head of the employers’ organisation Medef, said The Economist was behind the times because the government had begun to take measures to restore French competitiveness.
Six months after his election, Hollande has seen his popularity ratings plunge as he struggles to fulfil promises to reduce France’s public deficit while kick-starting a domestic economy where unemployment has risen to 17-year highs.
His government surprised some observers with ambitious moves last week to grant 20 billion euros in annual tax credits to companies as a way of lowering the high labour costs seen as holding French industry back, but many economists believe the measures are not sufficient by themselves.
In his first formal news conference since coming to power, Hollande defied his critics on Tuesday by vowing to reform at his own pace and asked French voters to judge him at the end of his mandate in 2017.
“The government... has finally recognised the competitiveness problem in the past few months,” said Peet. “But it is only a diagnosis, words. Now they must act.”
Hollande had some good news on Thursday when data showed France’s economy unexpectedly grew by 0.2 percent in the third quarter as households splashed out on clothing and other items, although the risk of recession next year is not averted.
Reporting by Mark John; Editing by Jon Boyle and Paul Taylor