France is the world's number 1 tourist destination. In 2003, 75 million
tourists visited France and stayed at least one night. The tourism industry
represents fully 8.5% of the
GDP of France. If the rioting goes on for much longer, or spreads further,
or turns bloody, will it scare away the tourists?
The French economy is
already royally screwed up. Taxes are too high, regulation is stifling, and as a
result job creation and growth are nearly nonexistent. The government guarantees
lavish benefits to the unemployed through its social safety net. If 1% or more
of the GDP of France goes away due to a decline of tourism, it means that
government tax receipts will fall, while government outlays will rise.
was that about the "stability pact"? Something about a limit on budget deficits?
Forget about it; France will have to borrow, and borrow a lot.
At which point
we get into an area I know nothing about: central bank policy and currency
values. What I'm wondering is what effect this could have on the €uro, and
therefore indirectly on economies of all the other nations which dumped their
own currencies and switched to it.
Read it all.
Nice to see SDB blogging semi-regularly again. A valuable voice.
Thanks to the Instapundit for the heads up.