• France's news in English

France heading for recession: Bank

AFP · 9 Nov 2012, 10:56

Published: 09 Nov 2012 10:56 GMT+01:00

Facebook Twitter Google+ reddit

It estimated that output would shrink by 0.1 percent in the last quarter, after an estimated setback of about the same amount in the third quarter.

This outlook underlines strains in the economy and comes in a week marked by a big effort by the government to reverse the falling competitiveness and a huge structural trade deficit.

The main thrust of new measures is to switch the cost of paying for social security and health benefits from employers to a wider tax base, and also to reduce public spending.

In the previous three quarters gross domestic product was flat.

These latest estimates are in line with those of the national statistics office INSEE and would mark the first recession since France was hit by the financial crisis in the first part of 2009.

A recession is considered to occur when output from one quarter to the next contracts for two quarters in a row. And emergence from recession, then a return to contraction within a few years, is commonly referred to as a double dip.

If output is flat or contracts for five quarters in a row, as the latest estimates indicate, this would be unprecedented in France since World War II.

INSEE expects the economy to have grown over the whole of 2012 by 0.2 percent, slightly less than the figure given by the government in its effort to reduce the public deficit to 4.5 percent of output at the end of the year.    

Story continues below…

Strong growth is important because it leads to higher tax revenues and to lower charges for benefits such as unemployment.

The latest estimates put France on a gloomy footing for the beginning of 2013.

The government repeated on Thursday that it is counting on the economy growing by 0.8 percent next year, but economists consider this to be optimistic. So does the European Commission which revised down its forecast for next year this week to 0.4 percent, half the government's figure.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
France poised to send bulldozers into Calais Jungle
Photo: AFP

As hundreds of migrants leave, the bulldozers are set to tear down the sprawling Calais shanty town on Tuesday.

UK to spend €40 million on securing Calais border
Photo: AFP

Britain spending big on security in Calais.

Millionaire Riviera hotel boss kidnapped in broad daylight
The city of Nice where the millionaire was bundled into a car infront of shocked onlookers. Photo: AFP

The millionaire head of a luxury hotel in the French Riviera resort of Cannes was kidnapped in front of shocked onlookers in the middle of the day on Monday.

Where exactly in France are Calais migrants being sent?
Photo: AFP

Here's where the 8,000 migrants in Calais are heading.

The annoying questions only a half French, half British person can answer
Photo: Beery/Flickr/AFP

Being half French, half British is means you get asked a lot of questions (and some of them can be a little annoying.)

Migrants bussed out of Calais Jungle to all corners of France
All photos: AFP

Hundreds of migrants are being bussed across France on Monday ahead of the demolition of the Jungle camp.

The must-see French films of the millennium - Part One
A Prophet. Photo: YouTube Screengrab

Looking for something to watch?

The must-see French films of the millennium - Part Two
Rust and Bone. Photo: YouTube Screengrab

The newest French films you need to see before you die (or alternatively when you get some spare time).

Election Watch
Presidential hopeful reckons a pain au chocolat is 10 cents

So France happily takes the pastry out of him.

French ministry of defence officials die in plane crash
Screengrab: eddydeg/Twitter

The French Ministry of Defence officials were killed on Monday when a light aircraft went down on the island of Malta.

The annoying questions only a half French, half Brit can answer
Sponsored Article
Last chance to vote absentee in the US elections
Forget Brangelina's chateau - here are nine others you've got to see
The must-see French films of the millennium - Part One
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
jobs available