Fillon delight as economy grows 1%

FRANCE’S economy has grown at its fastest rate since the second quarter of 2006, with prime minister François Fillon and economy minister Christine Lagarde both hailing the figure of 1%.

Mr Fillon said the figure was twice that of the UK and the United States. It is also a significant step from the 0.3% growth recorded in the last quarter of 2010.

He was so delighted with the figures he broke with protocol and announced the news on TV station TF1 before they were due to be released by national statistics body Insee.

In March Insee had forecast just 0.6% growth and when it revealed the figures this morning it said increased consumer spending and business investment had been the backbone of the boost. However, it noted that the rising price of oil meant that imports were greater than exports.

Ms Lagarde said all the “lights are at green” for the economy and added she was “very confident that the government’s forecast of 2% growth over 2011 would be realised”.

For certain sectors “the drivers of growth were at their best level for 30 years” and she noted that private investment had increased by 0.7%, consumer spending was solid and more than 59,000 jobs had been created in the first quarter alone.

Some economists, however, noted that growth in the second quarter would be affected by the rising price of oil.

A more sombre note also came as Insee announced the rate of inflation had grown to 2.1% in April compared to 2% in March. This is the highest rate since October 2008. French inflation is still less than the European average, which is 2.8%

The cost of living also rose 0.3% from March, with rising energy prices being largely to blame.

The value of the Smic minimum wage could rise as the price index rose 0.3% over April making a 2% rise over the year. That may lead to a 2% rise in the Smic in July. The interest rates on Livret A savings accounts could also rise to 2.5% in August.

Graph: Insee