Economic reforms such as cutting labour costs are a step in the right direction, but France can and must do more to reduce a record jobless rate, the head of its central bank said in a newspaper interview. The government was already giving companies tax breaks to help lower their wage bill in the hope that hiring would be boosted as a result, Bank of France governor Francois Villeroy de Galhau was quoted as telling Wednesday's edition of Ouest-France.
"(But) France can and must do better... Unemployed and young people don't have time to wait for various political timetables," said Villeroy de Galhau, who also sits on the European Central Bank's Governing Council. "That's why it's necessary to keep going with a certain number of reforms like labour costs, for example." Asked if volatility in the Chinese stock market had revived fears of a fresh crisis, Villeroy de Galhau said 2016 would not be like 2008, when a global financial crisis erupted.
"The banks are much more robust thanks to the rules we have imposed on them," he told the newspaper, adding that France's banks were "twice as solid" now as before the crisis. ECB President Mario Draghi said last week that global market turmoil, plunging oil prices and weaker growth across emerging markets were increasing economic headwinds for Europe and that the bank would have to review its policy stance in March.
Villeroy de Galhau said there was not "a general problem in emerging markets, but some delicate situations" following the drop in oil prices. He said the Chinese economy remained strong while India would be the "star of the world economy" this year with more than 7 percent growth. The euro zone, meanwhile, was recovering with a growth level around 1.7 percent, while France was expected to reach about 1.4 percent growth, Villeroy de Galhau said.
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