French growth goes negative
FRENCH growth suffered a downward revision just days before the government puts together its final budget ahead of presidential elections next year.
France’s economy contracted by 0.1 percent in the second quarter, the Insee statistics agency said, revising an initial estimate of zero growth.
This adds a layer of uncertainty to ambitious growth and deficit targets that President Francois Hollande’s team reaffirmed last week as campaigning for 2017 presidential election gets under way.
The revision, which shows both consumers and businesses held back spending in April through June, highlights France’s difficulties in combining spending boosts in the run-up to the election with the need to bring the deficit in line with eurozone rules.
Finance Minister Michel Sapin said he stood by his 1.5pc growth forecast for this year and next.
“All of this does not put in question the growth forecasts of around 1.5pc for 2016 and 2017,” he said.
Growth of that size is instrumental for the government’s tax and spending plans as well as honouring the promise to bring the public deficit back under the EU limit of 3pc of gross domestic product. –