Monday 21 October 2019

France slips into recession for first time in four years as exports and spending fall

French President Francois Hollande
French President Francois Hollande

France entered recession in the first three months of the year as the economy contracted by 0.2pc because of weak exports, investment and household spending, according to new figures,

The data - which marks France's first recession in four years - is further bad news for the Socialist government after the number of jobless people hit an all-time high in March.

French growth has faltered as raging unemployment undermines the confidence of both consumers and businesses, which are struggling to cope with government belt-tightening.

The preliminary data from the INSEE statistics agency showed investment contracted 0.9pc in the first quarter, with business investment down 0.8pc, while exports contracted for the second quarter in a row, shrinking by 0.5pc.

Household consumption dropped by 0.1pc, contracting for the first time since the second quarter of last year despite higher spending on energy due to a particularly cold winter.

A Reuters poll of 23 economists had an average forecast for the €2 trillion economy to contract 0.1pc in the first quarter.

Recession is defined as two consecutive quarters of contracting GDP. The French economy shrank by a revised 0.2pc in the final quarter of last year.

Most private-sector economists say the economy would be lucky to grow 0.1pc this year, as President Francois Hollande's government forecast last month that it would.

In light of the weak economic outlook, the European Commission has offered France two extra years to bring its public deficit in line with an EU limit of 3pc of GDP, but is seeking firm commitments to more reforms in exchange.

 

 

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