IMF sees no end to French jobless crisis this decade The IMF said the jobless rate will rise yet further to 11.6pc in 2014 and will not drop below 10.6pc within Mr Hollande's five-year term. If this grim scenario unfolds, it will be a political hammer blow for Mr Hollande. He asked the nation to judge him on his record in "bending the unemployment curve." The Fund said efforts to bring down the budget deficit should focus on spending cuts rather than fresh taxes, "which are among the highest by international standards and have a negative effect on investment and job creation." Two-thirds of Mr Hollande's fiscal squeeze has come from taxes, to the fury of the business lobby Medef. The country will see an anaemic expansion in 2014 after being trapped in semi-slump for almost two years, with growth creeping up to a peak of just 1.9pc by 2018. The IMF's critique is gentle compared with blistering attacks on Mr Hollande by some French commentators. Nicolas Baverez called Mr Hollande the "Gamelin of economic war," a reference to the general who relied on the Maginot Line and oversaw the collapse in 1940. The France of 2013 is an island of immobility, suffering from lack of leadership and strategy, just as in 1940. Hollande has placed the Republic at the mercy of the National Front and the euro," he said. The IMF praised Mr Holland's Socialist government for pushing through reforms that have cut the "tax wedge" on labour, and introduced "flexicurity" that allows firms in trouble some scope to renegotiate wages and working hours. However, it said the changes are "not as yet sufficient to reverse the loss of competitiveness" or restore the profit margins of companies, the lowest in Europe. While wage growth may have been good for workers, it has eaten into the seed capital that firms need to keep their footing in global markets. France has seen a chronic erosion of labour competitiveness against Germany under monetary union due to higher wage deals. Pay has jumped 53pc in France and 35pc in Germany since 1999. French hourly wage costs are now 5pc higher at €36.40, even though German productivity is better. The IMF said the new twist is that France has begun to lose ground to Italy and Spain as they shake up their systems or cut wages. The chief worry is "a steady loss of market share, both globally and relative to peers." Eric Dor, from IESEG business school in Lille, said the fortunes of French and German industry have diverged dramatically since the launch of the euro. Industrial output grew at a similar pace in both countries until the late 1990s, with France able to devalue from time to time to stay competitive. From January 1999 to April 2013, French production decreased by 11.4pc while German production increased by 32pc. We're seeing a steady decrease in France's productive capacity. Profitability is so low that there is no incentive to invest. It is very worrying," he said. The IMF said France's net International Investment Position has deteriorated over the past six years from near balance to -22.5pc of GDP, posing a risk to "external sustainability." France's public debt will peak at 95pc of GDP next year, but this could jump to nearly 100pc if the eurozone rebound falters. That is deemed "high risk."