France’s economy has flat lined for the third quarter running in the three months to June, amid worries that Europe’s second economy is hovering on the edge of a new recession.
The preliminary estimates released on Tuesday by the state statistics agency INSEE showed that French gross domestic product (GDP) was unchanged in the second quarter this year, Press TV reports.
This while Finance Minister Pierre Moscovici believes France would meet the government’s growth forecast of 0.3 percent this year.
“These figures are not excellent but at the same time France is not in recession while the majority of its European partners are,” Moscovici said.
However, French government needs to find 33 billion euros in new taxes and spending cuts to reach a 2012 deficit target of 3 percent, even if growth targets are met, which most economists think is unlikely.
“I think that French economy will no longer resist shocks, because small and medium sized companies have performed very badly this quarter and the next quarter, we are likely to enter recession…,”an economist with KBL Richelieu, Pascal Bernachen said.
Unemployment has also spiked in France. Latest figures show that 11,700 jobs were lost during the past month, making nearly 10 percent of the total workforce jobless.
Socialist President Francois Hollande’s, who was elected in May on jobs and growth promises, now faces an increasingly tough battle to deliver while simultaneously meeting a commitment to reduce France’s budget deficit.
Slower growth would force the government to make greater cuts or raise more taxes to meet its deficit targets.
