This is an outstanding blog from Ambrose Evens-Pritchard writing in the Telegraph. It is recommended reading. Check it out!
The article concludes that:
The penny has dropped that France is trapped in policy regime that will cripple the socialist party, just as it crippled Zapatero’s PSOE in Spain, or PASOK in Greece, and they will not take it meekly.
Germany’s rulers are in turn cleaving rigidly to their certitudes, unwilling to even start to analyse the core problems of EMU through any prism other than their own.
Personally, I think that Germany is right to be seriously worried about the French economy. French industry is increasingly un-competitive, with over-protected labor markets, a bloated public sector and some of the highest taxes in Europe. For years, French Governments have come to power with a reforming mandate but French leaders have not stood up to the powerful unions.
I envision France joining the rest of the Mediterranean economies like Greece, Italy, Spain, Portugal and Cyprus, with a major economic crisis. France is a serious economic risk to the Eurozone. Indeed a French economic crisis could easily bring the Euro down or force German to reflate. The period to the German election in September will be especially risky, in my view. I fear that the hedge funds will be speculating against France.