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Will attacks galvanise French reform?

Monday, January 12, 2015 - 02:28

It was a momentous occasion - world leaders walking arm-in-arm and millions of citizens marching in solidarity - but what impact will the Paris attacks have on a struggling French economy? As Sonia Legg reports spending priorities could be about to change.

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It's a massive undertaking - after the killing of 17 people by Islamist militants in France - security has been beefed up big time. 5,000 police officers will guard Jewish sites and 10,000 soldiers will also be deployed. The bill will no doubt be hefty but the country's Defence Minister says the government is taking no chances. (SOUNDBITE) (French) FRENCH DEFENCE MINISTER, JEAN-YVES LE DRIAN, SAYING: "The President asked the armed forces to help secure vulnerable areas of the territory due to the scale of the threats which exist for our country." The world has been watching France in recent days - the weekend's protest in honour of the victims of last week's shootings were the biggest public demonstrations France has ever registered. The desire of so many to show unity in the face of attack is perhaps understandable. And it could help an unpopular President, says Berenberg Bank's Christian Schulz. (SOUNDBITE) (English) CHRISTIAN SCHULZ, SENIOR ECONOMIST, BERENBERG BANK, SAYING: "It's very often the case that the nation unites and a leader gains in popularity after such events so politically it might boost them - in the short-term it may put off the immediate need for reforms." That's a worry for some investors - who've been looking at France's struggling economy for some months now. The latest central bank outlook was again bleak - growth, if you can call it that, of just 0.1%. Brenda Kelly is from IG. (SOUNDBITE) (English) BRENDA KELLY, MARKET ANALYST, IG, SAYING: "We have seen them ask for extensions on their deficit and for the time being France is in a problematic state - it's no longer considered one of the core economies and I do feel that in some respects we have a long way to go if we are going to see any form of growth akin to what we have seen in Germany." Many aren't surprised by France's economic predicament - it hasn't seen nearly as much reform as Spain, Portugal and even Italy, and unemployment continues to rise. The recent atrocities could work both ways. (SOUNDBITE) (English) CHRISTIAN SCHULZ, SENIOR ECONOMIST, BERENBERG BANK, SAYING: "This unity that France is now showing may galvanise the much-needed thrust for further reforms. If the Socialists can work together with the centre-right opposition and get some more serious labour market reforms and product market reforms this could be a positive turning point not just politically but also on the economic front." But there's another possibility - the current security challenges could lead to further delays in economic reforms. And that's something that may not be welcome by some of France's neighbours - however sympathetic they feel about their plight.

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Will attacks galvanise French reform?

Monday, January 12, 2015 - 02:28