top cx logo
cx logo
Explorearrow down
search icon
arrow down

Recession to hit French economy

Govt statistics group predicts a second quarter of negative growth but warns no one should mention the ‘R’ word yet.

The French economy will shrink by 0.3% in the third four-month period of the year - technically putting the country into recession.

Despite its predictions, government statistics agency Insee warned against using the word ‘Recession’ too prematurely - noting that overall the French economy will have grown 0.9% by the end of 2008.

The definition of a recession is two consecutive four-month periods (trimestres) of negative growth.

While France experienced a drop of 0.1% in its second trimestre, its performance in the first ensures that by the end of the year, economic growth will be positive although markedly smaller than the past two years.

In 2006 the economy grew by 2.4% and in 2007 by 2.1%.

The head of the economics department of Insee Eric Dubois said the drop in growth had been “extremely marked”.

He said household consumption, the traditional growth motor of the French economy, had stalled because of diminishing spending power.

The agency has said an upshot of this was that inflation was being kept low at 2.4%, especially since fuel prices dropped and stabilised from their summer peaks.

On top of this Mr Dubois said the economy would be hit by the weakening jobs market with the loss of 52,000 jobs in the second half of the year and an unemployment rate of 7.4% by the end of 2008.

Resident or second-home owner in France?
Benefit from our daily digest of headlines and how-to's to help you make the most of life in France
By joining the newsletter, you agree to our Terms & Conditions and Privacy Policy
See more popular articles
The Connexion Help Guides
featured helpguide
Income Tax in France 2023 (for 2022 income)*
Featured Help Guide
- Primarily aimed at Britons, covers pensions, rent, ISAs, shares, savings and interest - but also contains significant general information pertinent to readers of other nationalities - Overview of online declarations + step-by-step guide to the French printed forms - Includes updates given automatically after this year's site opened
Get news, views and information from France