French economy set for minimal growth

The French economy is set to grow by a minimal amount in the first quarter of 2014, the country's central bank confirmed on Friday. France's economy is forecast to grow around 1 percent in 2014, which does not compare favourably to predictions for the UK or Germany.

French economy set for minimal growth
France looks set for minimal growth in 2014, the country's national bank report. Photo: Kentee Gardin/Flickr

The French economy is expected to grow by 0.2 percent in the first quarter, the country's central bank said on Monday, confirming a preliminary forecast issued a month ago.

The bank makes its forecasts based on a monthly survey of a panel of private sector executives, who have reported that business confidence remained largely unchanged in February.

The central bank noted that industrial production was "steady" across almost all sectors in February. This was particularly so in the chemical, pharmaceutical as well as machines and equipments industries.

"Deliveries are intensifying" while "the order books are filling out somewhat", said the bank which also expects business activity to improve slightly in March.

In the services sector, a "slight rise in activity" is seen in March.

The eurozone's second biggest economy turned in slightly better than expected growth of 0.3 percent last year. 

The European Commission predicts France's economy will grow by just 1 percent in 2014, compared to 2.5 percent for  the UK economy and 1.8 percent in Germany.

However, it is struggling to bring down its jobless ranks, with 3.31 million unemployed on the register in January.

French President Francois Hollande's government is also under pressure to cut public spending and raise revenues, with the European Commission last week placing the country under close surveillance over its failure to rein in its deficit.

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UK economy leapfrogs France, new study claims

There was more bad news for France on the economic front on Wednesday as another study claimed that the British economy was currently in the process of overtaking the French as Europe’s second largest.

UK economy leapfrogs France, new study claims
Ouch. France overtaken by the UK as the world's 5th economic power. Photo: Oli Bac/Flickr

While the jury is still out, the evidence is growing to suggest the UK economy is currently in the process of overtaking France’s.

The latest think tank to produce a study with that conclusion is the UK’s National Institute of Economic and Social Research (NIESR), which believes France will grow at just 1.3 percent this year compared to the UK’s growth rate of 2.5 percent.

Simon Kirby, principle research fellow at NIESR, said Britain was expected to overtake France both in terms of purchasing power parity (PPP) – which adjusts for living costs – and at market exchange rates.

“When you compare the two economies, it’s really been a story over the past few years of a relatively subdued domestic economy in France, with a lacklustre housing market, consistent falls in housing investment and most of all subdued consumer spending,” said Mr Kirby.

“An elevated unemployment rate of 10pc, as well as general uncertainty within the monetary union has also been an important factor.”

The study is not the first to show a symbolic shift in Europe’s economic league table. In January, figures from the European Commission’s website revealed that France’s GDP was less than the UK's over 2014.

Newspaper Le Figaro reported that France's GDP, that is, the wealth created by the country, was estimated at €2,134 billion, while the UK’s was quoted as €2,232 billion.

Christophe Blot from the French Economic Observatory in Paris said at the time that such league tables were of little importance.
"It’s not really a surprise that the UK is above France given the problems the French economy has faced, such as record unemployment and a lack of growth," he told The Local.
"Of course the data will be used by politicians and the French bashers and it is a blow to morale but it doesn’t really matter. We are all aware of the problems in France over the last few years but the question is how can we boost growth in the French economy? That’s all that matters.”