Thanks for the detailed review! I read fistfulofeuros solely because of your posts However you almost never write about Switzerland. Can you comment on the state of the Swiss economy? It is a major european financial hub, so it would be very interesting to find out how it is doing in times of a crisis.

Petr

Austria does

http://www.wifo.ac.at/wwa/servlet/wwa.upload.DownloadServlet/bdoc/P_2009_11_13$.PDF

In Austria, the houselhold consumption shows a robustness comparable to the french situation, though Austria’s economy is much more open and dependent to the international conjuncture than the french one.

This said, I can’t give you a reason for such a stability (0,1% growth in private household consumption from quarter to quarter since Q2 2008), its far above my knowledge of this country’s economy

Such employees have retained their jobs (and spending power). M Sarkozy is, of course, intent on replacing only 1 in 2 of those retiring, or otherwise leaving their service. But those retiring will receive (guaranteed) pensions, whilst those leaving for other reasons will, presumably, have paying jobs to go to?

Whilst the high level of public employment may be helpful in the current crisis, it has been shown to be a drag on economic expansion in normal times.

Basically for the sort of reasons Will gives, plus France’s very positive demographics. Consumption driven economies (as opposed to economies where consumption simply rises in association with other factors, like investment for export) depend on consumer credit increases. France has a higher proportion of people in the relevant age groups for borrowing than most other Eurozone countries, plus debt levels did not rise too high during the last cycle (as in Spain), so France is ready to assume a higher level of private indebtedness.

I would stress I am not saying that this is all positive, since what we are seeing is increasing structural distortion in the French economy (as we have seen in other consumption driven economies last time round), with a decline in manufacturing share, and a slow but steady loss of international competitiveness.

In economics you can seldom find “free lunches”. If you want more explanation see my last post on the French economic linked in the post above.

Will

“Over a longer period I would not necessarily agree that the French economy is the only one in the Eurozone that will have a strong domestic consumption element at its core.”

You wouldn’t like to advance a list of possible candidates would you ?

But I would say that these factors mainly support short term outperformance of the French consumer market. Over a longer period I would not necessarily agree that the French economy is the only one in the Eurozone that will have a strong domestic consumption element at its core.