France officially in recession
Second quarter of shrinking economy has already seen households and businesses cut spending
FRANCE is officially in recession, with statistics agency Insee revealing today that the economy shrank by 0.2% in the first quarter of 2013, the second consecutive quarter with a reduction in growth.
The last quarter of 2012 also saw demand for goods and service contracting 0.2% and the continuation of the trend into 2013 is the official sign of a recession.
Forecasts from the International Monetary Fund and the Organisation for Economic Co-operation and Development had warned that it would happen, but the government maintains that it will turn this round to achieve 0.1% growth for 2013.
Being in recession means less tax revenue for the government and that means new budget measures could be announced.
Both households and industry have been affected: with families seeing their buying power reduced and being forced to cut their spending (down 0.1% in the first quarter of 2013) while industry has seen capital investment down 0.9% since the turn of the year.
The recession makes it even harder for President Hollande, who is due to face questions on his year in power at a press conference tomorrow afternoon, to keep his promise of reducing unemployment by the end of the year.
To follow the President's press conference, go to Elysée website
