French economy returns to recession


A year since Mr Hollande became president, French households are still feeling the pinch as Hugh Schofield reports

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France has entered its second recession in four years after the economy shrank by 0.2% in the first quarter of the year, official figures show.

Its economy shrank by the same amount in the last quarter of 2012.

President Francois Hollande has said he expects zero growth in 2013, lower than a 0.1% growth forecast by the French government.

Separate figures showed that the recession across the 17-nation eurozone has continued into a sixth quarter.

A recession is defined as two consecutive quarters of negative growth.

The economy of the 17-nation bloc shrank by 0.2% in the January to March period, according to the EU's statistics office Eurostat, with nine of its members now in recession.

Germany's economy, generally considered to be the eurozone's strongest, grew by just 0.1% in the quarter.

The European Central Bank cut interest rates at its last meeting to a record low of 0.5% in an attempt to stimulate growth.


France has record unemployment, and low business and consumer confidence.

News of the latest recession in France, which is Europe's second-largest economy, comes on the first anniversary of Francois Hollande being sworn in as president.

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In the past France and Germany together provided the motor for the European Union. Now Germany is the indispensable power. France has seen its influence wane”

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The French unemployment rate is running at 10.6% and is forecast to rise further next year.

Its budget deficit is also expected to remain well above the EU target of 3% of GDP, with the commission estimating it will be 3.9% this year.

But France's unemployment rate is below the eurozone average, which was 11.4% in 2012 and is expected to hit an average of 12.2% this year. In both Greece and Spain the rate stands at about 27%.

France this week passed a range of measures aimed at stopping the rise in unemployment by reforming the country's labour laws.

These include measures to make it easier for workers to change jobs and for companies to fire employees.

The French economy has performed better than other eurozone members, including Spain and Italy, but it has not moved as quickly to reform its economy.

French GDP 2008-2013

One of the new bill's main measures is to allow companies to cut workers' salaries or hours temporarily during times of sluggish economic performance, something that is common in Germany.

'Negative view'

On Wednesday, President Hollande is meeting the European Commission president, Jose Manuel Barroso, and other commissioners in Brussels for talks on boosting eurozone growth, as well as to talk about France's efforts to reach the EU's deficit target.

Mr Barroso told French radio on Wednesday that France had "lost competitiveness in the last 20 years".

He added that he thought the country sometimes had a "very negative view of the opportunities of the modern world, for example of globalisation".

France entered its worst recession since World War II in 2009. Although it was thought to have been in recession in 2012, these figures have now been revised to show only one quarter of negative growth.

Germany's growth figure of 0.1% in the first quarter was far weaker than expected, with economists having expected a rate of 0.3%.

Annual figures from the country's Statistics Office also show the German economy has shrunk by 1.4% when compared with a year ago.

But in a statement it said this was partly due to severe winter weather: "The German economy is only slowly picking up steam. The extreme winter weather played a role in this weak growth."


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  • rate this

    Comment number 460.

    "Funny how there are more British people in France than French in Britain."

    I don't think that's true. There are about 350k French in London alone and rising. Far more than the number of Brits in France. (except perhaps in August!)

  • rate this

    Comment number 459.

    "French Government tries to run the country for the benefit of all it's citizens, "

    Oh please, the funniest comment to date.

  • rate this

    Comment number 458.

    #439: "Socialism is state funded growth based on taxation and it doesnt work"

    Wrong on the first point: state funding cannot create or sustain growth as it is based on recycling (usually with extraordinary inefficiency) revenue previously generated in the private sector. Socialism is fundamentally opposed to the rights and freedoms that lead to economic prosperity.

  • rate this

    Comment number 457.

    Laughable listening to all these Tory-types gleefully trying to blame the French problems on Socialism. (as if Tory-type Bankers aren't responsible for the whole mess!)

    At least the French Government tries to run the country for the benefit of all it's citizens, and not like our loathsome one, just for the benefit of the very rich.

  • rate this

    Comment number 456.

    408 All I want is an end to BBC-style, handwringing "liberalism": endless apologism, entitlement without work, rights without responsibility. I don't mind bunging a couple of quid in if you lose your job, I object to buying you a house, feeding your 3 kids and putting them through school and then holier than thou chumps insinuating anything but "shut up and pay" is some how "far right".

  • rate this

    Comment number 455.

    Socialism V Capitalism = social capitalism.

  • rate this

    Comment number 454.

    Like many I admire the French socialist way of life. And wish we were more like France or the Scandinavian countries.

    However, it can cause economic problems. Witness the huge number of jobless in France.

    Perhaps the real problem is capitalism?

  • rate this

    Comment number 453.

    447 gubbs

    "Funny how there are more British people in France than French in Britain"

    The British are over there for weather and cheap houses and to sip coffees in quaint little village squares, the French are over here for jobs and to start businesses. Not sure whats "funny" about it.

  • rate this

    Comment number 452.

    You're obviously not old enough to remember it took BT 6 weeks to connect a phone in the 70s.
    The French might own their infrastructure but how much has it cost them over the years to maintain, upgrade and service. The debts alone from wages must be immense.
    Governments running services does not work. Just ask all of Eastern Europe.

  • rate this

    Comment number 451.

    The GDP is one number among many that says little about the financial health of a country. People confuse it with the economy but it is barely related. It's an indicator about financial flows that is hard to measure. It is pretty useless when you don't analyze what's behind it.

  • rate this

    Comment number 450.

    Why a HYS focussed only on the French economy when we could be discussing Mervyn King's ostensibly (slightly) positive forecast and how this effects us compared with Europe?
    How will France's recession and the rest of the Eurozone effect our apparent new growth? Do we believe that our recovery is real and sustainable, and is it enough to address the deficit before we bankrupt?

  • rate this

    Comment number 449.

    @416.where am I
    ...Needless to say the attempt to apply a socialist model doesnt work

    what attempt, I don't know of any attempt to apply socialism in the west in modern times, if you're referring to France, the1973 Pompidou-Giscard Law forces all French governments to apply neo-liberal economics &, as far as I know, Hollande isnt planning to repeal it

  • rate this

    Comment number 448.

    439.where am I
    "No I didnt. Socialism is state funded growth based on taxation and it doesnt work"
    Which we don't have here , infact the only nationalised industries we seem to have left are the Royal Family and you Tory/UKIP forelock tuggers seem to rave about them.So tell me how you equate this crisis to Socialism again ?

  • rate this

    Comment number 447.

    Funny how there are more British people in France than French in Britain.

  • rate this

    Comment number 446.

    Hollande has completely failed to cut public spending. You still see hoards of local workmen cutting grass, doing EU funded projects,and in many places even the public loos still have full time paid attendants!

    There are countless layers of bureaucracy which make running any buisness a nightmare, home owners have to spend days getting small changes to their houses approved. France = basketcase.

  • rate this

    Comment number 445.

    I wonder if the French are discussing our economy, whilst we discus theirs..

  • Comment number 444.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 443.

    #353 I see you come from the IDS school of maths; most recent general stats show German GDP/exports roughly 2x that of UK on a workforce just 20% bigger than the UK. UK growth has flatlined generally since 2010, and on a best case comparison over the period has ave. growth of 0.3% v 0.9% for Germany, so ave UK growth one third of Germany's. But don't let facts get in the way of a bit of spin.

  • rate this

    Comment number 442.

    Correct, wouldn't we love to be in the situation where our government is holding stakes in large British Industry like BT, BP, Centrica, Thames Water etc. The French governments stake in EDF is worth 30bil euros alone, and they have large stakes in Safram, GDF, Total, Areva, France Telecom etc

  • rate this

    Comment number 441.

    Ed Balls - are you listening?


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