Antwerp, Belgium 2014
The Great Recession began in the United States in 2007 and spread to the European nations shortly after. The recession followed the Global Financial Crisis that peaked in the United States in 2008. France’s economy began to sink in the beginning of 2009. As the second largest European economy, the global financial crisis and fall of world trade had deepened unemployment rates.
With low consumer confidence and slow business, the unemployment rate continued below average of the rest of its European neighbors. France’s slow response to reform changes brought France back into recession in 2013. The International Monetary Fund urged France to cut spending as other European nations pulled out of recession, leaving behind France. The second recession is also a political disaster. President Hollande failed to restore the economy in the earlier years of the recession. Rather than impose austerity measures and spending cuts, he relied on raising taxes to boost the economy. The state sector weakened the private sector because of this. The IMF warned France of the widening gap within the other membered European states. With pressure to meet the European Monetary Union’s deficit rules, President Hollande’s situation is even more complicated.
Economists argue that austerity measures are not enough for long-term growth. The biggest challenge for France is the rising unemployment rate and the labor market. Structural weakness will only increase the economic problems. Labor reforms were aimed at making it easier for workers to change jobs. The reform passed, also implementing furlough days. Companies are now allowed to temporarily cut workers salaries or hours during economic difficulties. Furlough days decrease massive layoffs for companies, keeping the unemployment rate from rising.
As a major economic sector and second largest economy in the Euro Zone, France’s cycle of recession deeply impacted the domestic wellbeing and its foreign affairs. The economic crisis was inevitable: participating in the global market will only stimulate a ripple effect when one country is plagued with economic hardships. France continues to recover through implementing structural changes and economic reforms.