Spain on Brink is France Next

Spain on Brink, is France Next.

The French government is due to present its budget.  The budget will include measures to plug a 30bn euro hole in the country's finances.  Officials have suggested around two-thirds of the money will be come from tax rises rather than spending cuts.

According to the French President Francois Hollande', this budget will be France's toughest for 30 years with a planned 75% tax rate to be imposed on annual income above 1m euro.  Nine out of 10 French taxpayers will not be affected by the tax increases, according to French Prime Minister Jean-Marc Ayrault.

In the last few days, unemployment has risen above 3 million, the highest level it has been since France joined the euro.  Meanwhile, private sector output has fallen to its lowest level in three and a half years.  The French economy has suffered three consecutive years of zero growth.

Our view
Spain, we believe is on the verge of a bailout request.  France has lost its AAA rating making it more expensive to borrow.   France is the food supplier to Europe, and with poor harvests it will suffer.  It has a record 3m unemployed and is looking at tough budget cuts herself.  France’s economy is bigger than the UK’s and when you look at Armageddon, it is Spain, Italy and France all at risk.  2013 could be a very unlucky year.