Executive Summary

• France:  Bet on a bankruptcy of the French government
• Italy:  Will not be able to fund its debt obligations without external help
• Spain:  The best outcome at this point is years of grinding financial repression
• UK:  At growing risk of a big upward spike in price inflation, leading to a currency crisis

If you have not yet read Part I, available free to all readers, please click here to read it first.

Individual States

France

Perhaps the cameo event that best describes French attitudes was the recent correspondence between Maurice Taylor Jnr, head of Titan International, the tire manufacturer, and Arnaud Montebourg, France’s Minister for Industrial Renewal. While it was good theatre, the serious points were that on average a French worker at an industrial plant works for three hours a day, and that the Minister resorted to threats that any Titan products imported into France would be “inspected by the relevant authorities with extra zeal.” That is the way things are done in France: Upset the Minister or a government functionary and none of your product gets to market, as Mr Taylor will shortly find out.

France has an official unemployment rate of about 10.5%, which would be somewhat higher if it were not for three-hour days in many of the factories. Taxes on employers are among the highest in Europe, and employment legislation is so onerous that employing an extra hand is the last option for all private sector employers.