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How worrying is new crisis in France?

Monday, August 25, 2014 - 01:41

France's Prime Minister has presented his government's resignation, a day after the Economy Minister called for new economic policies. As Ivor Bennett reports the resignation comes as France's economy continues to struggle.

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It's only been in place for four months but this French government is no more. Splits among ministers over economic policy prompted prime minister Manuel Valls to resign, who is now poised to form a new one. The final straw came at the weekend. Economy Minister Arnaud Montebourg again questioned the government's strategy saying deficit reduction measures, favoured by the Germans, were crippling weaker euro zone economies. (SOUNDBITE) (French) PASSER-BY FELIPE NELSON SAYING: "These are people who are trying to have some influence. So obviously, they are not following the line... I think it's the best thing." (SOUNDBITE) (French) PASSER-BY PENELOPE LIOT SAYING: "I'm very satisfied with the prime minister's decision. I think that, in its current form, this government couldn't function and was incoherent." France is about to start negotiating a new budget. It's already missed one deficit reduction target and it looks likely to miss another, thanks to weak growth. The prospect of negotiating with its EU partners when the government couldn't even agree was far from ideal. Commerzbank's Christoph Rieger. (SOUNDBITE) (English) CHRISTOPH RIEGER, HEAD OF INTEREST RATE STRATEGY, COMMERZBANK, SAYING: "With Montebourg likely dropping out, we'll see tomorrow, the end result may not be so negative for the market as a very left-leaning socialist would then drop out. So ultimately this would be good for the economy, good for deficits as well, but clearly near-term the uncertainty will weigh." Last week President Francois Hollande announced new reforms to tackle the country's problems and to try and boost his dire popularity rating. Just days later the headlines are of "crisis" and "revolt." It may take more than a new government to turn around what some are calling the new sick man of Europe.

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How worrying is new crisis in France?

Monday, August 25, 2014 - 01:41