France – Unemployment still a drain on growth ..
There has been a sharp rise in economic sentiment over the last few months with some confidence factors hitting six year highs . However , France remains the weakest economy of the big three in Europe . Unemployment is close to or even more than double that of German and the UK and it remains well above even neighbouring countries like the Netherlands . With Q1 2017 economic growth of just 0.3 % many believe there is little hope of employment prospects increasing significantly with even the IMF stating that it will be hard to get unemployment below 8.5 %
The French debt burden which was around 60 % at the start of this century also remains stubbornly high at almost 100 %. Public spending remains a heavy drain as France has one of the largest public sectors in Europe and public spending accounted for 56.5 % of GDP in 2016 , the highest of any developed economy .
With fuel cost increases pushing up inflation , private consumption growth is set to decline as wages fail to keep pace . By contrast investment in the construction industry is continuing to grow . Exports are also expected to rise over the next two years whilst the squeeze on private household budgets is anticipated to hold down any increase in imports , thus reducing the scale of the negative trade deficit .
New car sales ended 2016 5.1 % above 2015 and whilst France has already seen two months of falls to the end of April this was partly caused by the Easter weekend moving from March to April and YTD sales remain up 2 % year on year .
European Automotive Report - 2017 Quarter 1 15