World Economy

French Growth Fastest Since 2011

INSEE said consumer spending rose by 0.5% in the third quarter.INSEE said consumer spending rose by 0.5% in the third quarter.

The French economy expanded at its fastest pace since 2011 in the third quarter, boosted by acceleration in consumer spending and robust investment, official data showed on Tuesday.

The 0.5% increase in the July to September period, which was in line with expectations, meant gross domestic product expanded by 2.2% over a year, a pace not seen in six years, Reuters reported.

Stronger than expected growth in previous quarters provided more good news for President Emmanuel Macron, as his government’s growth target of 1.7% was now likely to be surpassed, making his aim to cut France’s budget deficit easier.

The €2 trillion ($2.33 trillion) economy, the second-largest in the eurozone, grew more than previously forecast in the second quarter of this year and the fourth quarter of last year, with both figures revised up by 0.1 percentage point to 0.6%.

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Lifted by a broad pick-up in economic growth among its eurozone trading partners, France is also benefitting from rock-bottom interest rates and cuts in companies payroll charges which have fired up investment from businesses and households.

The recent uplift comes after five years of sluggish growth that left the unemployment rate standing at close to 10%, which Macron has vowed to reduce to 7% by loosening labor rules, cutting taxes further and investing in training.

INSEE said consumer spending rose by 0.5% in the third quarter, after 0.3% the previous quarter, while investment increased by 0.8%, after a 1% rise in the second quarter.

However, trade shaved 0.6 points off GDP, with imports picking up by 2.5%, faster than a 0.7% increase in exports.

A build-up in inventories, mainly in the aerospace sector, contributed 0.5 points to GDP.

Meanwhile, France’s efforts to impose a new tax on US groups such as Amazon and Google should not be seen as a sign that the centrist president has turned anti-technology, the country’s digital economy minister has said.

Quite the opposite, says Mounir Mahjoubi: it shows the French leader is serious about fostering a thriving European technology ecosystem by removing unfair fiscal privileges.

Back from a meeting of EU ministers in Luxembourg, Mahjoubi said Paris’s proposed levy on revenues for US tech companies was “not lost at all”, as member states including tax-friendly Luxembourg now agreed on the need to make those groups pay more taxes. “It is not normal that some companies pay almost no taxes in some countries, when other companies pay more,” he said.

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