French Strike against economy

French Strike
against economy

1 February 2009
Wall Street Journal

French unions are worried that the faltering economy will lead to massive job cuts. So naturally they organized a general strike yesterday that could cost the economy a few hundred million euros in lost working hours. Nobody has ever accused the union bosses of clear thinking.
"Black Thursday" is the first sign of political trouble in a major European economy as a result of the economic crisis. More than one million people protested against President Nicolas Sarkozy's economic management. As always, France's public-sector employees were particularly eager to strike -- 23% of them didn't show up for work

Apart from the professional strikers among France's radical unions, many French people are genuinely scared of losing their jobs. Unemployment, just under 8% now, could top 10% by next year. About 70% of the public support the strikes. The problem is that the left is fueling these understandable fears to advance its political agenda, which would only make things worse.
The opposition Socialist Party called for the government to revoke tax cuts of up to €15 billion implemented in 2007, right after Mr. Sarkozy's election, and to spend that money on pump-priming the economy. The unions demand that the government halt precrisis plans to phase out 30,000 jobs in France's bloated public sector. But government debt is already on the rise as a result of the recession, multibillion-euro banking bailouts and stimulus plans. Urging the state to waste more money on superfluous pencil pushers is no boost for the economy.
The unions also want better job protection and a repeal of legislation that relaxed rules on the 35-hour workweek. But this would only increase production costs for French companies, forcing more layoffs. Unemployment would worsen.

Trouble is also flaring up elsewhere in Europe. Iceland's government had to resign Monday after weeks of protests. The economic crisis has triggered antigovernment protests in Bulgaria, Latvia and Lithuania. Several countries face general elections later this year, including Slovakia, Lithuania, Bulgaria and Germany, Europe's biggest economy.

These campaigns will take place amid the worst recession in decades. The challenge for mainstream parties will be to prevent social unrest while stopping radicals from gaining at the polls. As tempting as it might be, pandering to the left can only backfire.

France eyes airline stimulus plan

France eyes airline
stimulus plan

BBC News.

The French government is preparing to tell banks to lend 5bn euros ($6.5bn: £4.68bn) to airlines to help them with aircraft purchases, reports say.

Shares in EADS, parent firm of European planemaker Airbus, rose on Monday, but were later only 0.78% ahead.

Reports in France say the banks are being asked to act in return for benefiting from a 10bn-euro package of state funds to boost capitalisation.

Airbus chief executive Tom Enders has warned 2009 will be "challenging".

"We all know that 2009 will be a very challenging year for the aeronautics industry," he said last week.

'Slightly contrived'

Airbus is restructuring to cope with currency volatility and other issues.

Its Power8 cost-cutting programme has saved 1.3bn euros, but could face a revenue shortfall if the economic crisis affects customers' ability to pay.

The aerospace industry is one of France's biggest export earners and provides thousands of high-tech jobs.

"The market is struggling to get its mind around it [the package]," said Sandy Morris, analyst at ABN Amro.

"We've been expecting some increased support from the government, but it sounds a slightly contrived way to do it."

'Respond'

It is understood French banks would receive a further 5bn euros in state guarantees from the body set up last year to back up to 320bn euros in new bank debt.

A French finance ministry official quoted by the AFP news agency said that the plan would "permit us to respond to the difficulties of plane manufacturers' clients who can't find financing".

Airbus saw a 7% rise in deliveries to a record 483 planes in 2008.

Last week it said it had a backlog of 3,715 jet orders, which, it is estimated, would take six years to clear, although this could be reduced to four years with cancellations.

reference: France eyes airline stimulus plan
BBC News, UK