The Guardian reports .... How would it cope?
France would find life difficult: it has low growth and high levels of debt. Sarkozy has kept his head down over the past year with only the occasional speech delivering the message that France is pootling along fine. However, below the surface, its banks are struggling: Crédit Agricole, one of Europe's largest, is high on the list of troubled institutions, having bought all kinds of loans related to the sub-prime crash and a lot of Greek bonds.What would happen to its economy?
Like Britain, France would probably find its currency devalued against the euro. That helps cut its debt because it would be valued in the new currency, which is suddenly worth less. But import costs would go up; and, much more importantly, without German protection, financial markets would get nervous and the cost of interest payments on its debt would rise.
France outside the eurozone would suffer its own economic troubles – as would Germany
Technically it can quit and reinvent the franc in the same way Greece could leave and start paying for things with drachmas. But the 16-member eurozone would struggle to survive if one of its two main economies pulled out. Germany alone would have to underpin the finances of Italy, Ireland, Spain, Portugal and Austria, which have all borrowed heavily from lenders who are nervous they might not get their money back.How would it cope?
France would find life difficult: it has low growth and high levels of debt. Sarkozy has kept his head down over the past year with only the occasional speech delivering the message that France is pootling along fine. However, below the surface, its banks are struggling: Crédit Agricole, one of Europe's largest, is high on the list of troubled institutions, having bought all kinds of loans related to the sub-prime crash and a lot of Greek bonds.Then there are measures such as labour productivity growth, which is lower than Britain's over the 12 years from 1997 to 2009. It is low productivity and growth that is the crux of the issue and France is in much the same position as other European nations, including Britain. Investors ask how it will grow its way out of the crisis when demand in Europe is flat and its goods cost too much to sell in other parts of the world.
What would happen to its economy?
Like Britain, France would probably find its currency devalued against the euro. That helps cut its debt because it would be valued in the new currency, which is suddenly worth less. But import costs would go up; and, much more importantly, without German protection, financial markets would get nervous and the cost of interest payments on its debt would rise.via news.google.com
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