French economy to pick up as row with EU looms

The French Economy should pick up in the coming months and the rate of unemployment stablise after a gloomy start to the year, it was predicted on Thursday as France hopes to renegotiate its defecit targets with Brussels.

French economy to pick up as row with EU looms
French unemployment levels should stabilise and the economy should pick up over the coming months. Photo: AFP

France's economy barely expanded at the start of this year, but growth should pick up if fall short of government forecasts, the national statistics agency said on Thursday.

INSEE's forecasting arm said in its quarterly outlook report that it believes the French economy expanded by 0.1 percent in the first quarter.

The Bank of France last month forecast 0.2 percent growth for the January to March period.

Both their forecasts are a slowdown to the 0.3 percent growth rate that France turned in for the final quarter of last year.

A first estimate of first quarter gross domestic product growth is due in May.

INSEE expects growth to pick up to 0.3 percent in the second quarter, and for the economy to expand 0.7 percent for the year as a whole.

The government forecasts 0.9 percent growth, and a slower expansion could make it difficult to meet revenue targets and keep its promises to the EU on reducing the public deficit.

A 0.7 percent expansion would still be a considerable improvement to the 0.3 percent growth that France recorded in 2013, however.

Overall, "the progression in activity in France should therefore remain modest" in the first half of 2014.

Meanwhile, the unemployment rate in metropolitan France should remain steady at 9.8 percent in the first half of the year.

Bringing unemployment down was one of the main campaign pledges of President Francois Hollande in his 2012 election campaign.

The number of jobless, as measured by unemployment benefits claims, hit a new record of 3.34 million in February, an increase of 420,000 since Hollande took office in May 2012.

Heading for a row with Brussels

France's reshuffled government took a combative tone with Brussels on Thursday, with new Finance Minister Michel Sapin saying the "pace" of deficit reduction would be raised in EU talks.

European Central Bank President Mario Draghi quickly fired back that reviewing budget commitments would undermine confidence in the eurozone.

With the European Union pushing France to reduce its deficit, Sapin said he would work with the European Commission to "find the path to common interests".

"Europe will be in better shape when France is in better shape," Sapin said in his first public comments since his appointment on Wednesday.

"We must together share the only important concern: more growth for more jobs, while gradually rebalancing our public finances."

Sapin added that France would not abandon efforts to reduce the deficit, but provided no timeline.

"The goals are goals that we will meet," he said several times.

Sapin's remarks were in contrast to a warning by eurozone finance ministers on Tuesday that France must respect its promises to meet an already delayed EU deadline for budget limits.

Draghi repeated the warning on Thursday, telling reporters: "Undermining agreed rules undermines trust."

He said eurozone countries had made "important progress" in balancing budgets but should not "unravel past consolidation achievements".

The OECD, which advises rich nations on economic policy, also recommended on Thursday that eurozone nations "continue fiscal consolidation, respecting the requirements of the Stability and Growth Pact…"

France has promised to reduce its public deficit from 4.3 percent of national output last year to under 3.0 percent next year in line with the EU's pact.

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Warning: 6 of the most common scams in France to watch out for

From computer hacking to phone calls, a new report reveals that scams and frauds are unfortunately on the rise in France and the criminals are getting more sophisticated - here are some of the most common frauds to be aware of.

Warning: 6 of the most common scams in France to watch out for

France’s fraud and financial crime watchdog, Tracfin, has published its annual report, indicating that fraudulent activity has become both more frequent and more evolved in the last year.

The report highlighted the most significant forms of fraud tracked by the watchdog. In particular, it found that CPF (Compte Personnel de Formation) scams represented a significant proportion of the fraudulent activity registered this year. 

These are the scams the report highlighted:

The CPF scam: The Compte Personnel de Formation is available to all employees in France. Essentially, they are given access to money each year for free professional training (€800 for unskilled workers, €500 for full-time, skilled workers).

This is a real, government-backed scheme with a genuine website and app – it’s particularly useful for foreigners in France because the money can be used for French classes. Here’s how it works.

Unfortunately, however, the name is frequently used by scammers and Tracfin director Guillaume Valette-Valla warned that these scams have become more professional, often now involving transnational criminal organisations, particularly those located outside the EU, as well as shell companies that exist to siphon off the public money.

A lot of these scams involve SMS messages and phone calls warning people that they would lose their allowance and urging them to sign up to training courses have become increasingly frequent. These messages often contain fraudulent links asking recipients to enter their personal details onto dodgy websites.

The presence of CPF shell companies dramatically increased in 2021, according to the report. Tracfin received 116 reports of suspicion of shell companies, which is a significant increase from the 10 reported in 2020. 

For CPF fraud overall, the scams racked in accounted for over €43.2 million compared to €7.8 million a year earlier.

READ MORE: Beyond the scams: How to use France’s €500 training budget

The carte vitale scam – if you live in France your carte vitale is a vital document, allowing you to access publicly funded healthcare.

An increasingly common scam is sending a text message or email telling a person that their carte vitale is about to expire, and to click on the link and enter their details to keep it active. This is a scam, the carte vitale does not expire. If you need to make any changes to your card or request a new one if you have lost of stolen it, use your online Ameli account or visit your local CPAM office.

Driving scams – summer is the time of year when thousands of people – both locals and tourists – take to the roads for a trip away, and scammers often prey on drivers.

Some scammers operate at service stations, approaching non-French drivers and spinning them a sob story to try and extort money, while others operate insurance scams by pretending that you have damaged their car. There are also sporadic reports of ‘fake cops’ who try to issue on-the-spot cash fines to cars with foreign number plates.

Driving in France: The common scams thieves try on foreign motorists

Postal scams – it’s a very common experience to get a message from La Poste or a parcel courier telling you that you were out when they tried to deliver a package. Usually you will just need to arrange another time or head to the post office, but beware of text messages or emails telling you that there are outstanding charges for a parcel, with a link to enter your card details.

Couriers do not operate like this and if there are any outstanding postage or customs charges, you pay them in person not via a link in an email or SMS.

Ransomware attacks – France also saw a rise in ransomware attacks – particularly those targeting small businesses.

In 2021, the French National Agency for Information Systems Security (ANSSI) handled 203 ransomware attacks, compared to 192 in 2020 and 69 in 2019. This represents an increase of 194 percent increase in incidents handled in two years. These attacks were predominantly (over 52 percent) targeted at very small, small and medium-sized businesses.

Ransomware attacks are on the rise for two reasons: a lack of digital literacy and security, and an increased specialisation and professionalisation of the criminal ecosystem.

Fraud on government schemes: Tracfin also noted a rise in fraudulent declarations for government schemes, particularly those made available as emergency responses to the Covid-19 crisis.

These were mostly represented by misuse of compensation for short-time work, emergency aid for companies, self-employed people and business owners, and state-guaranteed loans.

Looking forward – the report also warned how NFTs (Non-fungible tokens) could constitute an additional fraud and cybersecurity risk for people across the country.

So far, Tracfin has received reports of scams involving NFTs whose value has been artificially increased (“pump and dump”), NFTs copying or plagiarizing original works without having the copyright or simply fake NFTs that disappear once they are downloaded from a fraudulent website. The watchdog also highlighted that NFTs could eventually be used for tax fraud. 

On top of tracking scams within France, Tracfin was also involved in tracking down the assets of Russian oligarchs after sanctions against Moscow went into place following the invasion of Ukraine, estimating that €1.18 billion worth of financial and non-financial assets have been frozen in France since the beginning of the conflict.

If you are contacted by a company and you are not sure if it is genuine, the French government has compiled a ‘blacklist’ of dodgy companies that frequently try and defraud people – you can find it here.

If you think you may have fallen victim to a scam, particularly if you have shared your banking information, the first step is to contact your bank. You can learn more about what to do in this scenario, HERE