French economy stagnates as consumers cut spending

European stock markets fall as Eurostat data shows French GDP was flat in the second quarter The French economy failed to grow in the last quarter as households across the country cut their spending, in the latest sign that Europe’s economy is stumbling. Data released by Eurostat, the region’s statistics body, on Friday showed that French GDP was stagnant between April and June. Economists had expected the economy to grow by around 0.3%. The disappointing data helped to send stock markets across Europe lower at the start of trading, with the FTSE 100 falling 40 points to 5122. France’s CAC 40 was down 1.9% at 3030.48. Household consumption in France fell by 0.7% compared with the first three months of 2011, increasing the pressure on president Nicolas Sarkozy to convince financial markets that he can meet his fiscal targets. Sarkozy has promised to release revised plans to cut France’s budget deficit within days. Finance minister François Baroin said the French government had no plans to change its targets for GDP growth on the back of one quarter’s data. He also pointed out that France’s economy had grown by 0.9% in the first three months of 2011. “For this year we are in line [with targets],” Baroin told French radio. In contrast, the UK economy grew by 0.5% in the first quarter of 2011, and 0.2% in the second. Baroin also insisted that France’s banks were among the safest in the world, just hours after regulators banned traders from ‘short-selling’ certain financial stocks in France, Italy, Spain and Belgium . Despite this move, shares in Société Générale and BNP Paribas fell by more than 3% in early trading. France has also denied that its AAA credit rating is at risk. Global economy Europe Europe Global recession Economics France Financial crisis Graeme Wearden guardian.co.uk

Posted by on August 12, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.