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Does France have right plan to revive its economy?

May 21, 2013 • World News


FOR STORY SLUGGED FRANCE SHRINKING ECONOMY – FILE – In this Sept. 27, 2012 file photo, French Minister for Industrial Recovery Arnaud Montebourg delivers a speech after meeting workers and trade union representatives of ArcelorMittal, in Florange, northeast France. The 50-year old lawyer Montebourg, is the man charged with reviving France’s shrinking economy and attracting businesses to invest in the country, but according to some analysts he is fast gaining a reputation for doing the opposite, as public spats with international companies, and efforts to block employee layoffs are being seen as the epitome of what is wrong with the French economy. (AP Photo/Mathieu Cugnot, File)

PARIS (AP) — The man charged with reviving France’s shrinking economy and attracting businesses to invest here is gaining a reputation for doing the opposite.

As the country’s first-ever minister for industrial renewal, Arnaud Montebourg has told the world’s largest steelmaker it is not welcome in France; exchanged angry letters with the head of an American tire company he was supposedly wooing; and scuttled Yahoo’s offer to buy the majority of a video-sharing website.

Montebourg, a 50-year-old lawyer from Burgundy, is the public face of President Francois Hollande’s plan to revitalize Europe’s second-largest economy, which is in recession and grappling with 11 percent unemployment. The plan is to make the French economy more competitive globally — especially for manufacturers — by making it easier to fire workers, offering a payroll tax credit and investing in small businesses.

Economists have praised the labor reforms as a step in the right direction. But mostly they say France’s economic plan is all wrong: It is too complicated; it favors a top-down approach to innovation; and it ignores some of the most serious problems plaguing France’s economy, such as high labor costs.

And then there is Montebourg, whose public spats with international companies and efforts to block layoffs are making France look like an unappealing place to do business.

In fairness to Montebourg, he’s not so much the problem as he is the symbol of it, analysts say. Even if Hollande were to replace him — and that’s looking increasingly likely — it’s unclear whether the substance of the industrial renewal strategy would change.

The sheer size of France’s economy has cushioned it somewhat from the worst of Europe’s debt crisis, which has brought depression-level unemployment to countries like Spain and Greece. It is home to many huge industrial companies, like EADS, parent company to plane-maker Airbus; Total, the world’s fifth-largest investor-owned oil company; and Sanofi, the world’s fourth-largest pharmaceutical company. France is also a cradle for design, high fashion and fine wine, embodied by world leaders like LVMH and L’Oreal.

But make no mistake, analysts warn: The French economy, which Login to read more

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