France's Economic Struggles

The European economic crisis is taking its toll in France. In early January, President Francois Hollande took both the center-left and the center-right by surprise when he announced a series of measures to boost the French economy, including substantial spending cuts as well as tax reductions for companies hiring new workers. These measures marked a reversal for the French government, which spent its first 18 months in office promising to avoid large spending cuts like those applied in southern Europe. A few weeks later, Paris announced that unemployment had reached 11.1 percent in December, invalidating Hollande's promise to reduce unemployment in 2013. The French government currently is holding talks with business groups and trade unions and is expected to announce the details of its anti-crisis plan by mid-year. The measures are meant to appease a population that is increasingly dissatisfied with Hollande's administration.

The French economy was slowing down long before the beginning of the eurozone crisis as the country struggled to remain competitive and reduce public spending. Previous administrations also faced limited success when applying structural reforms, sometimes because of pressure from unions and employers' organizations, and sometimes under popular pressure. However, the eurozone crisis has made things more difficult, because Paris is now being forced to apply reforms amid rising social unrest. So far, the French government is not in danger. Unlike parliamentary systems such as those in Italy or the Netherlands, the French semi-presidential system was designed to be stable, and Hollande has strong backing in the French parliament. But the ruling Socialist party will probably experience significant defeats in the upcoming municipal elections and in EU parliamentary elections, which will complicate the party's ability to implement deep reforms in the French economy.

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