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France struggling to find strategy to revive economy

PARIS — The man charged with reviving France’s shrinking economy and attracting businesses to invest here is gaining a reputation for doing the opposite.

As the country’s first-ever minister for industrial renewal, Arnaud Montebourg has told the world’s largest steelmaker it is not welcome in France; exchanged angry letters with the head of an US tire company he was supposedly wooing; scuttled Yahoo’s offer to buy the majority of a video-sharing site.

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Montebourg, a 50-year-old lawyer from Burgundy, is the public face of President François Hollande’s plan to revitalize Europe’s second-largest economy, which is in recession and grappling with 11 percent unemployment. The plan is to make the French economy more competitive globally — especially for manufacturers — by making it easier to fire workers, offering a payroll tax credit, and investing in small businesses.

Economists have praised the labor reforms as a step in the right direction. But mostly they say France’s economic plan is all wrong: It is too complicated; it favors a top-down approach to innovation; and it ignores some of the most serious problems plaguing France’s economy, such as high labor costs.

And then there is Montebourg, whose public spats with international companies and efforts to block layoffs are making France look like an unappealing place to do business.

In fairness to Montebourg, he is not so much the problem as he is the symbol of it, analysts say. Even if Hollande were to replace him — and that is looking increasingly likely — it is unclear whether the substance of the industrial renewal strategy would change.

The sheer size of France’s economy has cushioned it from some of Europe’s debt crisis.

It is home to huge industrial firms, like EADS, parent company to plane-maker Airbus; Total, the world’s fifth-largest investor-owned oil company; and Sanofi, the world’s fourth-largest pharmaceutical firm

But make no mistake, analysts warn: The French economy, which had no growth in 2012 and shrank at an annualized rate of 0.8 percent in the first three months of 2013, is in slow-motion free fall.

In the past decade, one in six industrial jobs has been lost. And economists say unemployment will rise to 11.6 percent.

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