France may be the new 'sick man' of the eurozone, writes Liz Alderman.
On a recent Sunday at the sprawling Marche aux Puces de St Ouen, France's largest and most famous flea market, crystal chandeliers glinted in a rare patch of Parisian sun.
An ornate Napoleon III-era clock perched on a marble mantelpiece, and sales signs peeked from vintage clothing, vinyl LPs and other curios that have long drawn throngs of shoppers here, jostling for a bargain.
But something seemed amiss on this afternoon, as it has almost every weekend for more than a year. As with so much else now bedevilling France, the economy is to blame. French consumers simply are not spending the way they used to, and that is an impediment not only for the merchants of the Marche aux Puces, but also for the country's ability to emerge from recession.
"It used to be elbow to elbow here," said Hamidou Debo, a shoe vendor who sat quietly in his outdoor stall as a handful of people browsed through silver-hued sandals and black leather high-tops before shuffling away without buying. "Now the crowds are around half what they used to be."
For Debo and 2500 other merchants in the 6.8-hectare market on the northern edge of Paris, an economic slowdown has gripped business, and there is no telling when things might turn around. Last year, he said, he regularly made €300 to €400 ($428 to $570) by lunchtime. Now he barely makes €100.
"It's the crisis," Debo said. "People are no longer spending. They are worried about what the future will bring."
Europe's long-running economic troubles have been, for the most part, confined to the feeble countries of Europe: Greece, Spain, Portugal and Italy. But more and more they are coming home to roost in France, raising questions about whether one of the Continent's biggest economies may become the next sick man of Europe.
By many measures, France is already moored in malaise. Unemployment is at its highest point since the current record-keeping system began in 1996 - 10.8 per cent - and job creation has been on a downward trajectory for more than a year.
President Francois Hollande, who recently acknowledged that the economic situation was serious, is offering a grab bag of measures meant to stimulate growth, including a program to create thousands of subsidised jobs for the rising ranks of unemployed youths. This week he announced a plan to invest €12 billion in the energy, digital, aerospace and health industries.
Hollande is also urging the French to be optimistic by citing forecasts that France and the eurozone will begin to emerge from their slump by next year, if all goes well.
Convincing the French may be no easy task, however.
On Wednesday, the French employers' union, MEDEF, warned that Hollande's policies were destroying 8000 jobs a day. The chief executives of Peugeot and other French corporations called for "urgent measures" to stem unemployment.
Last month consumer confidence hit its lowest level in France since records began in 1972. With unemployment still rising, households were more pessimistic than ever about the prospects for living standards, according to France's statistics agency, Insee. Consumer spending, which contracted last year by 0.4 per cent, is expected to remain stagnant for the foreseeable future, despite a slight pick-up last month, it said.
What's more, the French are continuing to hold onto a chunk of their savings for rainy days they see coming. The personal savings rate is 15.5 per cent, a touch lower than the nearly 17 per cent rate in 2011, but still well above the 2.5 per cent rate in the US. That is a lot of euros not being pushed through the economy.
No place may be more emblematic of the consumer state of mind than the Marche aux Puces, or flea market. It was so named in its early days in the 1870s because of the presumably flea-infested furniture among the goods carted in from the city's rubbish dumps by vendors known as "rag and bone men". In subsequent decades Pablo Picasso was said to stroll the market for inspiration.
Today the market is something of a microcosm of the French economy, with merchants in a vast outdoor area peddling inexpensive clothing, shoes and accessories for low-income shoppers, next to thousands of pricey antique and curio stalls that cater to an affluent crowd.
Not far from where Debo sat waiting for customers, Lauriane Barclais, a French public finance agent, said she and her boyfriend were cutting back on expenses and had virtually stopped eating in restaurants. In a rare splurge, Barclais had just paid €125 for a winter coat, but only because it was on sale.
The couple said several of their friends had lost jobs, were looking for work or could find only temporary employment. Nearly everyone they knew had become more parsimonious. "Everything has become more expensive - food, rent - but salaries stay the same," Barclais said. "The economy is not going well, and I don't see it improving."
"The economy was bad, but now it has become terrible," said Michel Corbez, the owner of an Asian antique furnishings stall, as a well-heeled French couple strolled by. "The policies of the current government are like the nail in the coffin."
As if flagging sales were not bad enough, Corbez said taxes on the boutique and on a larger store he owned in a Paris suburb had surged this year to €6000 annually, from €350 five years ago. "It's clear the government is desperate for money," he said, "but we are being taxed so much, we feel like we are left with very little. It makes you think they don't know what they're doing."
Near Corbez, Noureldin Elcheikh sits in the boutique he has run for 14 years, offering 19th-century French tapestries, gilt-framed mirrors and opulent cloisonne vases.
"We've never seen things as bad as they are now," Elcheikh said. "France is already sick.
"Things were slow, but purchasing power seems like it fell off a cliff since last October."
He sighed: "It's like the world has stopped."