The French Economy – is it taking a hit?

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The French Economy – is it taking a hit?
“When America sneezes, the rest of the world catches the cold.” That phrase originated in 1929 in the aftermath of the Wall Street crash. But some countries, such as Ireland, have contracted pneumonia. It’s the price Ireland has paid because it had one of Europe’s most open economies; as a result, many U.S. and multinational companies established headquarters there. The labor market was plentiful, educated and Anglophone, and Ireland offered tax incentives to companies offering employment.  A recent International Monetary Fund (IMF) report states that when times are good — and until recently they have been very good both in the U.S. and in Ireland — the Irish economy has benefited. But because of the recent economic downturn, Ireland has suffered dramatically due to its dependency on these companies. France is hurting too. But in many ways, it’s more subtle. American tourists aren’t making beelines for Paris, as they wait to see what the future brings in this depressed rock-and-roll stock market and as unemployment numbers climb. Even though it’s rumored the European Central Bank will reduce interest rates to stimulate increased spending, the French are holding back. People are going out less and this year’s winter sales have been a bonanza for people with money. Paris lawyer Tim Ramier said that if an item wasn’t marked down 50%, he passed it up. I’ve been amazed how receptive storeowners have been to further deep discounting merchandise. An example: I purchased two cashmere/silk sweaters for sixteen Euros each. On the other hand, that’s all I purchased this year, which would not be my usual modi operandi.   A friend who lives in Tours remarked that one of its main shopping centers has lost numerous shops including the furniture store, Habitat. Gerard said the merchants are nervous and people are changing their buying habits, even when it comes to groceries. Even the French, to whom food is sacred, are buying lesser cuts of meat, and generic brands are gaining popularity. He also noted that “Tarte Julie,” a tea room and restaurant that makes delicious quiches and light lunches, is usually waiting-room-only if you arrive during lunch hour. Now people can walk in and be seated immediately.  Many people have commented that lines in stores are shorter and even grocery store shelves appear to have less stock and fewer selections. It’s clear that merchants are girding their loins for a tighter economy. But part of this is also attributed to the inflation France has been experiencing during the past years. Everything costs more: from food, clothes, haircuts not to mention postage and transportation. Jenny and Riza, who work in French offices, reflected their salaries have not kept up with the jump in prices, and they’re simply buying less in order to keep even.  Some restaurants have lowered prices or are offering special pre-fixe menus. Jean-Philippe, who owns a restaurant in the 14th arrondissement, has implemented a menu where people can order a first course and a main course or a main course and a dessert that includes a glass of wine at dinner. He’s noticed that people who live in the quartier are eating out less frequently. JP’s of the school that it makes better financial sense to fill the restaurants with diners who are paying somewhat less than have tables sitting empty at the end of each service. However, he has cut his staff by one person during the week. Madelyn Byrne Willems, who is head of Paris Perfect Apartments, says bookings are somewhat down. “What I am seeing the most, however, is that people are waiting longer to reserve apartments. A few years ago, many clients would rent from one year to the next. We still have that nucleus but other people are taking a wait-and-see attitude. She also has a few apartments in London but people are booking those fast and furiously since the British Sterling is lower than it’s been in years.  Despite the dismal world-wide economy, Paris is still a magnet for tourists from all over the world. One Bonjour Paris reader wrote to say she is bringing her children to Paris for their spring break, adding that rather than staying two weeks, they’ll only stay ten days. Jane said that in the past, she might have rented a house in the Caribbean for the vacation. But she now feels money is more judiciously spent if the kids are able to absorb some history and culture rather than lying on a beach. If you live in Paris, are you cutting back, and, if so, how? If you’re coming to visit, how are you approaching your vacation and what are you doing differently? Not everyone has won the lottery. © Paris New Media, [email protected]
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