French unemployment rises

The French economy has been dealt some more bad news after official figures showed the unemployment rate rose last month.

The Labour Ministry said the jobless rate had risen to 9.6% last month, from June's figure of 9.5%.

The number of people classified as unemployed under International Labour Organisation measurements increased by 0.8% to 2,615,000.

The French economy is struggling at the moment, with figures last week showing that it contracted by 0.3% during the April to June period.

Limited options

There are fears that the French economy could be about to follow Germany and Italy into recession.

But the French government is constrained in it what it can do to boost the economy by the rules of the eurozone's Stability and Growth Pact.

There are already fears that the French government's budget deficit could exceed the 3% of GDP limit for the third year in a row in 2004.

On Wednesday, the French Prime Minister Jean-Pierre Raffarin called for greater flexibility in the way the eurozone's budgetary rules are applied.

After a meeting with the European Commission president Romano Prodi, Mr Raffarin said his main responsibility was to "increase growth and improve employment".