European Market Pressures Move To France

Originally published on August 11, 2011 7:25 am
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STEVE INSKEEP, host:

Summer's over for the president of France, Nicolas Sarkozy. As we heard elsewhere in the program, market pressures that have been plaguing the European Union, mainly pressing on Greece and Italy, are now creeping toward France, the eurozone's second-largest economy.

Teri Schultz continues our coverage.

TERI SCHULTZ: Sarkozy had warned his government ministers not to venture far on their vacations, in case they needed to beat a quick path back to Paris for meetings. He finally rushed back from his own Riviera holiday yesterday as international speculation that France could follow the U.S. in losing its AAA credit rating caused a huge sell-off of banking stocks across Europe.

While credit agencies publicly assured France there will be no immediate downgrade, the damage had already been done. Or had it? Some observers believe this may be just what's needed to finally resolve the eurozone debt crisis.

Economic analyst Thomas Klau of the European Council on Foreign Relations says that's because of Paris's proximity - politically, economically, even emotionally - to Berlin, the eurozone's last unquestioned economic powerhouse.

Mr. THOMAS KLAU (European Council on Foreign Relations): It may make it easier for Angela Merkel to, you know, go to her parliament, address the nation and say, look, now it's France that's under attack, this is unacceptable, let's do what it takes.

SCHULTZ: And Spanish financial journalist Bernardo de Miguel believes it could be a good thing for his country that it's not just southern European nations being battered by the markets.

Mr. BERNARDO DE MIGUEL (Financial Journalist): It's a kind of relief in that sense because it's going to force a solution from the eurozone.

SCHULTZ: But maybe not this week. So far, German officials say, Chancellor Merkel has no plans to cut her holiday short.

For NPR News, I'm Teri Schultz in Brussels. Transcript provided by NPR, Copyright NPR.