France and Italy losing their edge

The European Commission said Thursday the economies of Italy and France were struggling with excessive debt and high labor costs. A report released Thursday says the rising labor costs in Italy are hurting the country's competitiveness, as they are rising faster in Italy than in the rest of the eurozone. In addition, banks in Italy have been hampered by high rates of toxic loans, the report says. The New York Times said the report points out Italy's gross domestic product has dropped by 7 percent in the past five years. In France, labor costs are also reducing the country's competitiveness, the report says. International trade has been on the decline in France since 1997. The reduced number of exporting firms, their relatively small size, as well as factors relating to the business environment are also impediments for export performance," the report says. "Decisive policy action by member states and at EU level is helping to rebalance the European economy," said Olli Rehn, the commissioner for economic and monetary affairs, in a statement. "It will take some time yet to complete the unwinding of the imbalances that were able to grow unchecked in the decade up to the crisis, and which continue to take a toll on our economies," Rehn said.