Hollande hit by unemployment at 13-year high

Ben Southwood
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FRENCH UNEMPLOYMENT hit a 13-year high in the second quarter, it was revealed yesterday, while across the border in Germany strong domestic demand was shown to have boosted order books in July.

The unemployment rate in France hit 10.2 per cent – higher than at any point since 1999, even before Carrefour’s, Peugeot’s and Air France’s much publicised layoffs, according to data from official statistics body INSEE. This leaves nearly 2.8m unemployed in mainland France.

The development is sure to put further cracks in besieged Socialist President Francois Hollande’s popularity, as the premier won the election on a pledge to bring unemployment down.

The picture was altogether more positive in Eurozone powerhouse Germany, where industrial orders edged up 0.5 per cent, driven by a one per cent rise in domestic bookings.

However, analysts suggested this might be a blip correcting for the 1.6 per cent fall seen in June, and that the overall trend is probably negative.

“All in all it’s a counter movement after the weak previous month, but in the next couple of months we are likely to see a downward trend in orders,” said Ulrike Kastens at Sal. Oppenheim.

The big question is whether previously resilient Germany has finally succumbed to the euro crisis. Certainly analysts agree that her export orientated economy is vulnerable to international problems.

Eurostat data yesterday confirmed that the Eurozone economy shrunk 0.2 per cent in the second quarter, down from a completely flat story in the first quarter. Crisis-hit Portugal, Italy and Spain were hit hardest, while the Netherlands, Sweden and Germany managed to grow.