France: The euro trap

For France, the euro trap has the following components France cannot leave the euro, given its massive gross external debt in euros; In France, there are often calls for "another Europe" that would enable higher fiscal deficits and harmonise labour market rules; but the current European constraints (limit to fiscal deficits, no coordination of tax, social and labour market rule s ) do not explain France’s structural problems (low skill level, low efficiency of the education system, weak corporate modernisation, etc.); France has a cost competitiveness disadvantage, which explains the deindustrialisation and the market share losses; but it refuses to correct this handicap by lowering labour costs (via an internal devaluation), and this disadvantage therefore persists. Whatever the institutional developments in Europe, we can therefore see that France is caught in a trap: impossibility of leaving the euro, inability to improve competitiveness .