Don't expect French President François Hollande to be eating cake and sipping champagne as he celebrates his first year in power
The French unemployment rate is hovering just north of 10 per cent. French industry is struggling to compete against Germany and much-needed labour reforms are slow. French actor Gerard Depardieu left the country in a snit over a threatened 75 per cent tax rate on those earning over 1 million euros a year. And then there was the expensive ground offensive in Mali.
Now, there is news that the 2-trillion euro French economy -- the second largest in the eurozone of nations -- has slipped into a recession after two quarters of negative growth. The gross domestic product contracted 0.2 per cent in the first quarter of 2013.
Hollande got a bit of public grief from European Commission president Jose Manuel Barroso, who Wednesday demanded France speed up reforms in exchange for another two years of forgiveness to bring the country's budget deficit down. Earlier this year, the French government informed the EU the country could not reduce the budget deficit down to 3 per cent as planned.
Reuters reports that at a joint news conference between the two leaders in Brussels Wednesday, Barroso said France must shrink the "the exorbitant weight of debt" on its economy.
"The two years (grace period), if approved, notably by EU member states, should be used to speed up structural reforms on which future growth depends," Barroso told reporters.
Hollande replied the grace period would be used to push forward reforms already in place.
France’s economic issues may threaten the stability of the euro if it does not turn things around.
Change has not been easy for Hollande to broker. The French unions supported Hollande’s election but it is those same unions that now must agree to change in order to make the economy more competitive. France has also promised to cut 60 billion euros from the budget by 2017.
Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga