STOCK MARKET WATCH -- Tuesday, 7 February 2012

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23. French Trade Gap Swelled to Record $91 Billion in 2011: Economy

http://sfgate.bloomberg.com/SFChronicle/Story?docId=1376-LZ0IVD6JIJUO01-2TV7JH3N4BBQQM8HJLDSPNGED3

Feb. 7 (Bloomberg) -- France’s trade deficit widened to a record in 2011, underlining a drop in competitiveness that President Nicolas Sarkozy wants to counter with a cut in corporate payroll taxes.

The shortfall swelled to 69.6 billion euros ($91 billion) last year from 51.5 billion euros in 2010, the trade ministry in Paris said today. Exports climbed to 8.6 percent to 429 billion euros, outpaced by a 12 percent increase in imports to 498 billion euros.

As the euro-area crisis enters its third year, and with a presidential election less than three months away, the deficit has become a political issue as a symbol of France’s decline. Sarkozy wants to raise the nation’s sales tax rate to finance a cut in payroll levies that he says penalize industry. Socialist candidate Francois Hollande instead wants to create a public investment bank to finance research and development.

“France’s trade deficit has been deteriorating for a decade, and it’s about competitiveness, it’s obvious,” said Michel Martinez, an economist at Societe Generale SA in Paris. Whoever wins the election needs “to address this.”