France comes out of recession

FRANCE and Germany have become the first two countries in the euro zone to officially come out of recession.

New figures released by the government show the French economy grew by 0.3% in the second quarter of this year.

This compares with a 1.3% drop in the first quarter of the year and a 1.4% drop in the last three months of 2008.

The announcement surprised economists, who were expecting the country's gross domestic product to remain below zero for the time being.

Economy and finance minister Christine Lagarde (pictured) said the government's car scrapping scheme, the prime à la casse, and a rise in exports had helped.

She told RTL that the news was a "very encouraging development, which distinguishes France among developed economies".

"France is finally coming out of the red," Lagarde said. "These are obviously very positive numbers, which have surprised us and made us quite happy."

Analysts have warned, however, that the news does not mean the end of the economic crisis.

They point to the fact that consumer spending is still in decline as evidence that there is still some way to go.

Lagarde warned today in an interview with Le Figaro not to expect any "short-term miracles".

She said: "We are clearly in a phase of stabilisation but it is too early to say.

"I am still working on the basis that we will be out of the crisis by mid-2010. If we get out of it before then, all the better."

Photo: Remy Steinegger