Milton Ezrati claims that the French economy is in “profound decline”:
French authorities mostly have either denied the situation’s severity or blamed it on Germany’s push for budget austerity throughout the euro zone. There is no shortage of critical remarks to make about the German approach, but it can hardly explain France’s economic problems. France, after all, hardly has imposed much austerity. It has promised to do so but otherwise has asked of itself none of the sharp government spending cuts evident elsewhere in Europe’s periphery. On the contrary, French government spending has continued to grow, rising almost 4 percent during the last two years. Government in France now constitutes some 57 percent of the entire economy, well above the euro zone’s average. Meanwhile, Paris recently sidestepped the need for more strictures, receiving permission from the EU bureaucracy to continue wider budget deficits than EU rules allow until 2015 at the earliest. Nor can French officials honestly blame German austerity when their nation’s economic slide has beginnings long before the current crisis or Berlin’s response to it. France, quite simply, has been underperforming the rest of Europe for over a decade.
He blames “ill-conceived policies that have hamstrung business with oppressive taxes, stultifying labor regulations, and a raft of product and production controls”:
Taxes are the most straightforward and immediate economic burden. Payroll levies in France amount to 38.8 percent, and with the added burden of business income taxes and the value-added tax (VAT), employers in France pay the government the equivalent of almost 64 percent of their payrolls. This is a much heavier weight than firms in other countries must bear. Germany, for instance, imposes a tax wedge on its business of about 53 percent, high compared to the 38.5 percent imposed by the United States, but still more than 10 full percentage points less than France. Harder to quantify but no less a burden on French business is the notorious complexity of the French tax code, which, business surveys indicate, rivals even that of the United States. Its myriad loopholes, set against the high statutory tax rates, tempt managers to divert time to tax planning that they might better dedicate to production and sales.
The Dish 