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Friday, 31 August, 2001, 12:51 GMT 13:51 UK
New rise in French unemployment
France's prime minister Lionel Jospin
Lionel Jospin has made cutting unemployment a priority
France's unemployment rate has risen for the second consecutive month.

The headline jobless rate rose to 8.9% in July, up from 8.8% the previous month.

June's figure had been the first rise in France's unemployment rate for nearly three years.

The government said the jobless numbers for July had been inflated by the number of students entering the job market, but the "slowdown in economic activity" was also to blame.

According to France's Labour Ministry the number of jobless rose 39,600 to 2,372,000 in July.

France begins to suffer

Until now the French economy has appeared to be relatively immune to the economic slowdown being experienced by most of the world's main economy.

France's prime minister Lionel Jospin made cutting unemployment a priority when he came to power, inheriting an unemployment rate of more than 12%.

The most radical measure to be introduced was the cutting of the length of the working week to 35 hours.

But now the downward trend in the jobless rate seems to have been reversed.

The latest figures were worse than expected and analysts now expect the unemployment rate to hit 9.1% by the end of the year.

"France is no longer spared. The severe worsening in the industrial sector and its contagion effects on services are weighing on the labour market," said Emmanuel Ferry, an economist at Exane in a research note.

France and Germany reaffirm budget rules

In Berlin on Friday the French finance minister Laurent Fabius said the French economy was still proving resilient to the global economic slowdown.

"Our statistical institute last forecast growth of 2.3% which is less than the growth that was expected... but which in comparison with the international environment and other countries shows a situation of good resistance," he said.

Mr Fabius was speaking after a meeting with the German finance minister Hans Eichel.

The two ministers used the meeting to say they remained fully committed to the rules of the stability pact agreed by all members of the single European currency.

"We have full agreement between Germany and France. The pact holds, also with all its instruments," Mr Eichel said.

In recent weeks there had been speculation that budget deficit rules set out within the stability pact might be changed to rules governing overall expenditure.

See also:

30 Aug 01 | Business
ECB cuts interest rates
31 Jul 01 | Business
French unemployment rises
24 Jul 01 | Business
French hit the shops again
12 Jul 01 | Business
French inflation steadies
03 Jul 01 | Business
French consumer confidence tumbles
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