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France slips into recession - report
FRENCH leaders scrambled to reassure consumers, voters and investors today, after the official statistics agency warned that the eurozone's second largest economy had slipped into recession.The French economy shrank by 0.3 per cent in the second quarter of the year, and on Friday the Insee agency forecast that gross domestic product would drop by a further 0.1 per cent in both the remaining quarters of 2008. Economists define a recession as two successive quarters of negative growth but the government, desperate to maintain public confidence in the face of the global slowdown, steered deliberately clear of the term. "Finance Minister Christine Lagarde now regards the risk of negative growth in autumn for the second quarter in a row as real," her ministry announced, confirming Insee's estimates in a statement Friday. But neither Ms Lagarde, nor the French chairman of the European Central Bank, Jean-Claude Trichet, would confirm that the slowdown had tipped into recession for the first time since 1993. "ECB experts tell us that we have slowing growth," he said on the French radio station Europe 1. "I will not use any word other than that - slowing growth with significant risks that growth may become even weaker." Budget Minister Eric Woerth noted that taking into account the whole of 2008, the economy ought to grow by one per cent. "There's a technical and statistical definition, and there's the reality of things," he said, when asked if he would define the situation as a recession. But the press and the opposition had no such reticence. Both the right-wing Le Figaro and the left-wing Liberation dailies headlined on France's descent into recession, and the Socialist party leader seized on the figures as an opportunity to attack President Nicolas Sarkozy. "Yes, the recession is here," Francois Hollande told the daily Le Parisien. "This means the decisions, especially tax choices, made by Nicolas Sarkozy on the day after the presidential election have been revealed as inappropriate, ineffective and unfair and have amplified the shock of the global situation. "His policy has failed," Mr Hollande said. Posted by: tipper 2008-10-03 |
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