French surge strengthens

French surge strengthens

French quarterly surge is expected to strengthen in the first half of 2019 because consumer spending derives benefits from improving household incomes as well as reviving business confidence after protests at the end of 2018.

The euro zone's number two economy is braced for reporting a 0.4% leap in both the first and second quarters, soaring from 0.3% for the final three months of 2018.

The French economy would have tacked on by up to 0.4% at the end of 2018 if it were not for the influence of the yellow vest anti-government unrest that INSEE assessed at 0.1%.

December’s protests saw some of the worst street violence in the French capital for decades with protesters rampaging through upmarket neighborhoods, breaking the law, including burning cars and smashing store windows.

Excluding a flare-up the previous weekend, the violence has mostly receded since French leader Emmanuel Macron came up with concessions in December worth over 10 billion euros in a package intended to spur the incomes of the poorest employees and pensioners.

As INSEE pointed out, higher incomes would help consumer spending to bounce off 0.5% for the first quarter having dived at the end of 2018 against the backdrop of the unrest that made a lot of stores in central Paris to be closed during the peak holiday shopping period.

As for business investment, it was also anticipated to revived in the first half of 2019 as confidence strengthened although not to rates observed before a deceleration at the end of 2018.

By the way, INSEE saw a minor impact to the French economy from the UK’s departure from the EU, still scheduled for the end of March.

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