French carmaker blames ‘profound crisis’ in its eurozone markets as it announces plans to close factory and lay off thousands
Job cuts at Peugeot Citreon underline the challenge facing president François Hollande. Photograph: Bertrand Langlois/AFP/Getty Images
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The dislocation in the bond markets continues this morning — with the yield on Finland’s two-year government debt turning negative.
That means that investors are now prepared to pay more than the face value of the bonds.
Finland is now the fifth country to see negative yields on its two-year debt, following Germany, Switzerland, Austria and Denmark. Money has been pouring into their debt, driving prices to levels where there is no chance of a profit – unless the bond can be sold on to another trader for an even higher price.
On twitter, portfolio manager Drikus Combrinck suggests that markets are preparing for the possibilty that Germany, not Greece, quits the euro.
Updated at 09:51 BST
Nothing cheers the financial markets like the smell of job cuts in the morning.
Peugeot’s shares have risen by 3% in early trading, following the news of the 8,000 job cuts.
That comes despite an early drop on the wider Paris stock market, which is down around 0.2% in lacklustre trading.
Updated at 09:39 BST
French Social Affairs and Health Minister Marisol Touraine. (Photo by Solange GAUTIER/Gamma-Rapho via Getty Images)
A French minister has declared that the country “cannot accept” Peugeot’s plan to cut 8,000 jobs.
In
a sign that the Socialist government and the carmaker are heading for a
major disagreement, Marisol Touraine, social affairs minister, said
that a state-appointed expert will examine the situation and issue a
report in two weeks.
Touraine said:
The state is going to look at the company’s strategy and what should be demanded in the interests of its workers.
Although Peugeot is a publicly owned company, answerable to its shareholders,
Touraine argues that the €4bn which the government has handed over in
state aid in recent years gives it some influence over the situation.
Updated at 09:38 BST
Such deep job losses at France’s biggest carmaker show the extent of the economic crisis in Europe.
Chief executive officer Philippe Varin said the company had no choice, but conceded that the cuts were grim news.
Varin said in a statement that:
I am fully aware of the seriousness of today’s
announcements as well as of the shock and emotions that they
will arouse in the company.The depth and persistence of the
crisis impacting our business in Europe have now made this
reorganization project indispensable in order to align our
production capacity with foreseeable market trends.
The news that Peugeot Citroen had decided to cut 8,000 jobs and shut down its factory at Aulnay, near Paris, hit France around 8am local time.
The company insisted that the weak economic climate gave it no choice. It predicted that the European car market will contract by 8% this year – adding that the market has shrunk by 23% since 2007.
Unions and workers has been braced for job cuts, especially since the company warned last week that there was a ‘profound crisis’ in its key markets of Italy and Spain, as well as France.
Here’s how the job cuts break down
• 3,000 at the Aulnay factory which is closing
• 1,400 jobs will be cut at a factory in Rennes plant.
• 3,600 back office jobs will go, through “reducing costs and improving its operating
efficiency”
Good morning, and welcome to our rolling coverage of the eurozone financial crisis.
We’re starting with some disappointing news from France – Peugeot Citroen has announced 8,000 job cuts and the closure of a factory in France. The cutbacks have been blamed on a sharp drop in demand in the eurozone, as the economic crisis has deepened.
More details soon.
Later today, we’ll be tracking the fallout from Spain’s €65bn austerity plan – and yesterday’s protest march by the country’s miners in Madrid.
Also on the agenda, the European Central Bank will release its monthly report at 9am BST, which will include its latest economic outlook.
And last night’s minutes from the Federal Reserve have left traders rather cold, as they showed that the Fed was not ready to launch any further stimulus measures just yet. Shares are down in early trading, with the FTSE 100 dropping 41 points to 5622.
Sorry for the late start, regular readers – minor technical ‘challenges’ this morning. Not the fault of the new blogging tools though.
Updated at 08:52 BST
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On our daily blog we report on the turmoil in the bond, stock and currency markets – as well as the political dramas at the heart of the eurozone crisis.


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