France, Europe Debt Crisis | featured news

Even as the euro zone periphery starts to spy some glimmers of hope, concern is mounting that Germany is drifting apart from other countries at the core of the single currency bloc, notably France.

Moody's Investors Service has downgraded France's government bond rating, citing the country's weak economic growth outlook and its exposure to Europe's economic crisis.

The new tax is expected to be formally announced in the government's first budget on 28 September, but that does not mean there is a sense of panic in France. This new tax will only hit very rich individuals and only for a year or two, to help bring down the government deficit.

French President Francois Hollande has set himself a deadline to turn around the economy by the end of 2014, but having hamstrung the effort with tax rises to meet deficit targets, economists doubt his growth goals will ever fly.

Germany dismissed a French-led call for euro zone nations to issue common bonds, a day before a European Union leaders' summit which investors are looking to for new measures to counter the bloc's debt crisis.

There has been a great deal of austerity-bashing -- that is to say Germany-bashing -- this French election season. Buoyed by his success in the first round, Socialist candidate Francois Hollande declared last Thursday: "It is not for Germany to decide for the rest of Europe." Vowing to reset Europe on a growth path, he said, "we're not just any country, we can change the situation."

Unemployment rose to 10.9 percent in April, the 11th monthly increase in row, and is likely to add to tension ahead of national elections in Greece and France on Sunday.

Standard & Poor's ratings agency has downgraded France's credit rating, French television channels reported on Friday, citing a government source.

Germany and France clashed on Wednesday over whether the ECB should take bolder steps to stem the euro zone debt crisis, with Chancellor Angela Merkel issuing one of her starkest warnings yet against fiddling with the central bank's strict inflation-fighting mandate.

Moody’s Investors Service downgraded Spain’s credit rating Tuesday and warned that France’s rating could also be at risk, citing both nations’ vulnerability as Europe struggles to manage its persistent debt crisis.