France faces the “hell” of eurozone periphery, warns Dr Doom
France’s management of its economic affairs means the country should not be considered part of the eurozone’s inner core, economist Nouriel Roubini has argued.
In an interview with Bloomberg TV at the World Economic Forum in Davos, Roubini said the recent ratings downgrades of France and some other eurozone members suggest the sovereign and banking problems on the periphery have become entrenched in parts of the core.
“Now you have a hard core of the eurozone – Germany and a few others – and a soft core of the eurozone and France is part of that soft core,” the New York University professor said.
Roubini, the co-founder and chairman of economic and financial analysis firm Roubini Global Economics, also claimed that France “has not done much” to address its problems, as the country’s budget deficit has increased and structural reform has been discussed but not implemented.
“Is France a country that deserves to be part of the core of the eurozone?” the economist asks. “The purgatory could end up in the hell of the periphery unless they start doing something about the economy.”
Roubini – who was dubbed Dr Doom after predicted the 2008 global recession – also argued that the euro needs to depreciate by 30% as the eurozone is “doomed” unless its currency heads towards parity with the dollar
The European Central Bank should implement quantitative easing, cut policy rates and act as a lender of last resort to push down the value of the currency and restore some of the eurozone’s competitiveness, Roubini suggested.
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