Graphs and pen
27 March 2019

France's economic indicators are on the right track

Government deficit is at its lowest since 2006, economic growth is up and government spending and statutory contributions are down: the latest estimations by the National Institute of Statistics and Economic Studies (INSEE) show that France's economic indicators are on the right track.
 

Government deficit: at its lowest level since 2006

Government deficit, i.e. the gap between government revenue and expenditure, is at its lowest level since 2006: it is down from 2.8% in 2017 to 2.5% in 2018. This is the first time in ten years that France has remained below Europe's 3% deficit limit for two years running.

Economic growth is up

Activity has increased 1.6% in France, compared with INSEE's initial forecast of 1.7% growth. This has been driven by:
  • The vibrancy of French citizens' spending power, which gained significant traction in the 4th quarter (+1.1%) thanks to Government-led measures – not least the second phase of council tax cuts and scrapping of employee contributions. In addition to this come the emergency economic and social measures that the President of the Republic announced in December. This is the second year in a row that French citizens' spending power has increased to such an extent (+1.4% in 2017 and +1.0% in 2018).
  • Buoyant business investment, which grew by +3.9%.
  • Thriving exports, which have progressed by 3.3%, i.e. at twice the pace of imports (+1.6%).

Government spending and statutory contributions are down

Sound control of government spending has brought this down from 56.4% of GDP in 2017 to 56% of GDP in 2018. As such, statutory contributions have fallen by 0.2 GDP points and government debt is stable for the first time since 2007.