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The problem is that the recent downward drift may have more to do with state-sponsored work projects than job-creation in the real economy. A study of the Hartz labour law reforms introduced by the last Government, leaked to the German media, criticised a government- sponsored job-placement service as ineffective and expensive, citing a cost of €5,700 per employee.

There are some silver linings, notably the football World Cup in Germany this summer: investment before the tournament is creating new jobs.

Another explanation for falling German unemployment is evident in Austrian figures. Yesterday Austria blamed an increase in its unemployment rate to 5.3 per cent on an influx of migrant German workers.

The galling effect of France’s Loi Galland

THE annual price negotiation between France’s big retailers and their suppliers has become even more strident. Carrefour and E Leclerc, the hypermarket chains, are both issuing dire warnings about the high price increases demanded by the big brand companies for shopping-basket staples.

Puffing himself up as the last line of defence for the hard-pressed French shopper, Edouard Leclerc told Le Figaro, the French newspaper, that he wanted to hold the line at an inflationary 2 per cent increase. He accused Procter & Gamble, Unilever and L’Oréal of seeking to push through price increases of up to 10 per cent on leading brands and he threatened drastic action.

“If they don’t agree by mid-February to lower their rates or compensate us in rebates, we won’t hesitate to take their products off the shelves,” he said.

Behind the bombast, a genuine struggle is under way over who pays for the next round of French consumer price deflation. Overall, the cost of a typical shopping basket fell 2 per cent in France last year, thanks to a vicious price war initiated by Carrefour. The battle continues, but this year the rules of the game have been changed, thanks to the reform of the Loi Galland, a uniquely French law that seeks to defend small shops by outlawing the sale of goods below cost.

The Loi Galland failed to stop the march of les grandes espaces because the law defined cost as the number on the supplier’s invoice. Retailers were able to continue cutting their prices by demanding ever-greater rebates, backhanders and cash contributions to product promotions. Adding more complexity to absurdity, the new Loi Dutreil cuts from 35 per cent to 20 per cent the amount of back-door margin that can be earned by a retailer.

Hence the frantic manoeuvrings as retailers seek to squash attempts by the soap merchants to pass on their rising costs, knowing that the pot of back-door margin has been seriously depleted.

France is probably the only significant nation that enforces retail price maintenance, but there is no evidence that it keeps small shops in business or prevents predatory pricing. However, it allows ministers to tinker with the micro-economy and regulate the sale of shampoo, a key political objective.

carl.mortished@thetimes.co.uk