French stop-start recovery can’t compete with Spanish growth

Bloomberg

French growth rebounded in the third quarter as part of a start-stop expansion that leaves Europe’s second-largest economy lagging its neighbors such as Spain. Gross domestic product in France expanded 0.2 percent in the three months through September after shrinking 0.1 percent in the previous period, national statistics office Insee said. That compares with a 0.3 percent increase predicted by economists in a Bloomberg survey. The Spanish economy grew 0.7 percent in the period, in line with estimates in a separate poll.
The data offer a first glimpse of the economic performance in the 19-nation euro region after the U.K.’s decision to leave the European Union increased downside risks to the fragile recovery. Growth rates in the region are set to continue to tell different tales, with the French economy forecast to expand this year at less than half the pace of the Spanish one. “The big picture is that there is some modest re-convergence between the laggards like France and Italy and the stellar performers such as Spain,” said Frederik Ducrozet, an economist at Banque Pictet & Cie in Geneva. “That’s the trend beyond the noise and the volatility: both are re-converging towards their potential growth, which is fairly low for France in particular.”
France’s sluggish performance is adding pressure on President Francois Hollande, who has promised to say by mid December whether he will seek a second mandate in an election that is less than six months away. Finance Minister admitted the third-quarter figures will make it difficult for the government to achieve its full-year growth target of 1.5pc, though he rejected suggestions that the Socialist Party seek an alternative presidential candidate.