French growth slowed by rigid labour laws, public spending

PARIS – The International Monetary Fund says France’s rigid labour market, high taxes and inefficient public spending are continuing to drag down its economy.

In an annual assessment of France’s economy released Monday, the IMF said the country has made considerable progress in cutting spending, predicting that the deficit will drop to 3.9 per cent of GDP in 2013, down from 4.8 per cent in 2012.

But the report warned that France needed to accelerate reforms in its labour markets. The country’s rigid employment contracts make firing expensive and complex.

The report also said French taxes — already among the highest in the world — were sapping its ability to compete with its European neighbours, and said the country should instead streamline public spending in social security and at the local level.