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French minister says Merkel's austerity drive has failed
A French socialist minister has launched an impassioned attack on the "failing" austerity policies imposed on European economies, which he said were now only supported by the German chancellor, Angela Merkel, and a few others.
In outspoken comments that will fuel tensions between France and Germany, Benoit Hamon, the social and consumer affairs minister, told the Observer that it was "time to finish with the politics of austerity in Europe". He added: "Only Merkel, supported by a few northern countries, believes austerity is working … when it's clear there is no prospect of unemployment rates going down."
Figures released last week revealed that French unemployment had reached a record level, with more than 3.2 million people seeking work. As the economy stagnates, approval ratings for President François Hollande have plummeted to the lowest levels recorded since the fifth republic began in 1958. As a signatory to the European stability pact, which was strongly promoted by Germany last year, Hollande is committed to a programme designed to bring France's budget deficit below 3% of gross domestic product by the end of this year, although that target is almost certain to be missed.
On Saturday a leaked French Socialist party draft document accused Merkel of "selfish intransigence" as she continues to insist on austerity policies. Hamon said the French government needed to bite the bullet and accept that ending austerity would lead to a falling-out with Europe's biggest economic power. He said: "This will cause political tension with the Germans and cause political differences."
However, he added that as eurozone economies continued to stagnate and unemployment soared, particularly in southern Europe, the tide was turning against Merkel's emphasis on reducing debts at all costs. "The wave of opinion against austerity is in the majority now among leaders and economists," he said. "The only economy that is resisting, opposing, vetoing is Germany."
The deficit-cutting demands of the stability pact have been pushing eurozone governments to breaking point, as spending cuts and tax rises choke off economic growth. Last week Spain - which has a youth unemployment rate of more than 50% - said it would require two more years to hit its deficit targets.
Hamon's intervention also comes after a week in which the economics of austerity have come under scrutiny. Influential research on the effects of public debt by two American economists, Kenneth Rogoff and Carmen Reinhart, was attacked as fundamentally flawed. Their study, published in 2010, claimed that high levels of government debt lead to a sharp fall in economic growth, but the authors have been accused of basic errors in methodology.
[Source: By Julian Coman and Kim Willsher, The Observer, London, 27Apr13]
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