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30 Jan, 2013 05:56

France defends ‘solvent’ economy after minister says country ‘totally bankrupt’

French politicians have defended the state of the country’s economy after the Labor Minister described the economy as “totally bankrupt.” The minister later recanted his comments, claiming he was being ironic at the time.

In a radio interview on Sunday, Labor Minister Michel Sapin defended French austerity measures, saying that the budget cuts are needed for the economy to get back on track, and that “there is a state, but it is a totally bankrupt state.”Sapin later told AFP that the comment did not apply to the government of current French President Francois Hollande, and that his remark was intended as a joke. Yet a Monday poll in Le Figaro showed that 80%of French readers agreed with Minister Sapin’s assessment. French Finance Minister Pierre Moscovici defended his colleague, saying that “what he meant was that the fiscal situation was worrying,” the Daily Mail quoted him as saying.The controversy comes as Hollande’s new tax-and-spend fiscal policies have come under increasing scrutiny by the country’s wealthy elite. Most notably, French actor Gerard Depardieu recently renounced his French citizenship for a Russian passport due to France’s high tax rates.Many argue that instead of increasing the tax rate, the French government should spend less.“The problem is that the French government is the biggest economic actor in France. It spends the equivalent of 56.5% of all the economic activity. The only other countries that spend more apart from Sweden are places like North Korea. We all know those are not the world’s most prosperous nations,” Executive Director at DV Advisors Patrick Young told RT.In 2012, the ratio of French public debt to the gross domestic product topped 90%.“There is absolutely no question, the French need incredible radical economic reform. It was not present under the Sarkozy administration and frankly the incompetence of Hollande, the president, has resulted in the situation we have now, massive outpourings of cash, 53bn euro, that is equivalent to 3% of the entire economy, left the country during October and November last year,” Young added.Despite all this – as well as the recent downgrade by Moody’s, one of the world’s top credit rating agencies – Moscovici insisted: “France is a truly solvent country, France is a truly credible country, France is a country which is starting its recovery.”