UK worse off than France, says Francois Baron

 

France's finance minister took a swipe at the state of Britain's economy today hours after French experts predicted his own country would slide into a recession.

Francois Baron claimed that the situation was even worse in Britain.

"We would prefer to be French right now than British, in terms of the economy," Mr Baroin said on Europe-1 radio.

Cross-Channel tensions were stoked last week when the two countries' leaders clashed at an EU summit.

David Cameron was the only leader out of 27 in the European Union to refuse to consider a new treaty that would impose tougher controls on national budgets.

Mr Baroin joined France's central bank chief in saying ratings agencies should be paying more attention to Britain instead.

"The economic situation of Britain is worrying today," Mr Baroin said, without explaining why.

Bank chief Christian Noyer said in an interview earlier this week that downgrading France's credit rating would be "unjustified concerning the economic fundamentals".

"Or else they should start by downgrading the United Kingdom, which has higher deficits, as much debt, more inflation, and less growth than we do, and whose credit is collapsing," he said.

A spokeswoman for Mr Cameron, insisted today the French criticism was baseless. "We have a credible plan endorsed by numerous international organisations," she told reporters.

Chancellor George Osborne last month raised worries over the state of the French economy.

"We're not any more just talking about countries like Greece, we're talking about big countries like Italy and France ... having to take very, very difficult decisions," he said.

Late on Thursday night, the French statistics agency Insee forecast that the country's economy would shrink this quarter and next amid a worsening outlook for the whole 17-nation eurozone.

Investors are largely expecting economic growth in the region to slow sharply, causing recessions in many countries and making it more difficult to lower the government debt that is destabilising financial markets.

Insee said the French economy would contract 0.2% in the fourth quarter and 0.1% in the first quarter of 2012. It forecast renewed but weak growth in the second quarter in France, the second-biggest economy in the 17-nation eurozone.

It expects the eurozone to experience "a short recessive episode" over the winter, though the financial market volatility was making predictions difficult.

Mr Baroin tried to remain upbeat today.

"To the question is France a secure investment, the answer is yes," he said. He said the French banking system - under heavy strain - is "among the most resistant in the world".

He shrugged off threats of an imminent downgrade of France's credit rating - and possibly those of the whole eurozone - by the Standard & Poor's ratings agency. "We hear the message ... it's one message among others, not the most important."

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