French public debt hits 80% of GDP

A man dressed as 'death' joins a protest against the economic policies of French President Nicolas Sarkozy.


Source: Press TV
http://www.presstv.ir/detail.aspx?id=132810§ionid=351020603



French public debt has soared to 80.3 percent of its gross domestic product in the first quarter of 2010, invoking the specter of a Greek-style financial breakdown.

According to the figures published on Wednesday by the National Institute for Statistics and Economic Studies (INSEE), at the end of March, French gross public debt amounted to 1,535.5 billion euros ($1,877.1 billion), up by 46.5 billion euros ($56.8 billion) from 2009's last quarter, Xinhua reported.

INSEE said by ratio scale, the figure accounted to 80.3 percent of the GDP, 2.2 percent higher from the level of the last quarter.

The figures come as the government of French President Nicolas Sarkozy is scrambling to slash its ballooning budget deficit amid growing concerns that the country could plunge into a Greek-style bankruptcy.

Meanwhile, French Finance Minister Christine Lagarede and Budget Minister Francois Baroin said in a statement that the soaring debt was a result of the stimulus policies introduced following global economic crisis.

However, the governor of France's central bank said it could take as many as 10 years for Paris to tackle the country's deficit problems.

"I think it will take quite some years, perhaps between 5 to 10 years probably... We must work progressively, so this will take at least 5 to 6 years," said Christian Noyer, governor of the Bank of France.

Sarkozy's approval rating has receded significantly over the past months after his government unveiled austerity measures aimed at slashing its huge budget deficit.

France's flying budget deficit could make Paris liable for EU-imposed economic sanctions. EU rules say it's necessary for public debt to stay below 60 percent of national output at all times.

'Economic tsunami looming for West'

Source: Press TV
http://www.presstv.ir/detail.aspx?id=132622§ionid=3510213



A distinguished economist has warned that the world is in for a third economic depression, arguing spending cutbacks are coming at the worst possible time for the economy.

"Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline - on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses," economist and New York Times columnist Paul Krugman wrote in a piece published on the American daily's website on June 27.

"We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost - to the world economy and, above all, to the millions of lives blighted by the absence of jobs - will nonetheless be immense," added Krugman.

Disappointed by the G-20's commitment of deficit reduction, Krugman underlined "this third depression will be primarily a failure of policy."

"Around the world - most recently at last weekend's deeply discouraging G-20 meeting - governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending," he stated.

Krugman has discussed the necessity of continuing stimulus spending at a time when the global economic recovery is weak.