+ VIDEO GDP remained stable in the second quarter, as according to the first estimates published Thursday by INSEE. Michel Sapin admits that growth likely to reach 0.5% this year. And will probably not “much higher than 1%” in 2015
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GDP remained stable in the second quarter of the year, according to preliminary estimates released Thursday by INSEE. Stability that was already put in the first three months of the year. These results are insufficient to allow the government hoped that the activity reaches the 1% target it has set. And by extension its ambitions to reduce deficits by 2015.
With a half of stagnation, over growth, that is to say the level that GDP would reach if the activity continues to be slack in the second half, is only 0.3%.
“This is a bad number,” said Michel Sapin, Minister of Finance, at the European Microwave 1 “There is a French problem is a European problem. Even German growth is stopped, “said the minister.
The government forecast halved
In an article published by “Le Monde”, Michel Sapin warns against Besides that France will reach only 0.5% growth this year and does not believe in 2015 to a figure “well above 1%.”
Slow growth combined with sluggish inflation will result in a deficit “greater than 4% of gross domestic product in 2014,” yet the minister said, instead of an initial forecast of 3.8%. The purpose of a compliance in 2015 with the European limit of 3% in fact find compromise.
The right criticizes the policy in Paris left questioning Brussels
The reactions were not long after the publication of the wrong number. The right has unsurprisingly criticized government policy. Eric Woerth, UMP Oise, and former budget minister who was invited on Europe 1 has estimated that it was “the failure of the proposed pact responsibility of Francois Hollande, who is unable to implement (…) that does not produce the turning the government thought it would produce. ” He added that the government had to “reform the powerful labor code” and “get to work.”
Meanwhile, Laurent Wauquiez, vice president of the UMP and MP for Haute-Loire said that “the French economy has been stifled by taxes” and that worried that it was “the first reaction of Mr. Sapin (…) which is to say it is the fault of Brussels and it is the fault of the European Central Bank. (..) It is In Paris he
Left must change things. “as criticism is harsh even if we instead turn to Brussels to explain the situation. “European fiscal rules (…), control of public deficits as the primary objective of European economic fundamentals, we must learn to extract (…) It is not an admission of failure than appealing in Europe, it’s common sense “explained Jerome Guedj, President PS General Council of Essonne and representative of the left of the PS. And to appeal to “a shift to an overhaul (the) responsibility Pact having as priorities (…) household consumption and public investment.”
<.! - sdvenc ->Less critical as emphasizing that “France is implementing the necessary reforms to restore its economy and boost employment ‘ Didier Guillaume, President of the Socialist Party group in the Senate, also criticizes Brussels. “Rowing against the tide, it is no longer possible. It is urgent that the EU change its policy and kind of stubbornness that has lasted too long. The revival of growth requires that imperative. “He said in a statement.
Investment in failure
The first estimates released by the INSEE showed that consumer spending has picked up (with an increase of 0.5% which follows a decline of similar magnitude in the beginning of the year) but that this recovery is relative. This is a return to normal after a very mild winter, says the Institute of Statistics. Overall spending energy bound in fact 3.5% after falling 3.9% in the first quarter.
More importantly perhaps, the investment is still down. It even folds. -1.1% In the second quarter after the previous -1%
This is “particularly, the decline in construction investment” that continues, says INSEE. But more worryingly, the decline in investment affects all economic actors; whether companies (-0.8% in the second quarter after -0.7%), public administration (-0.5% after 0.0%) or even households. In the latter case, the decline amounted to 2.4% (after -2.9% in the first quarter).
And as bad news never comes alone, foreign trade and training of business inventories also weighed on growth.
Meanwhile, in Germany, GDP fell by 0.2% over the same period.
Borrowing from Germany and France to their lowest historical
The borrowing rate of Germany and France rates hit new lows Historical Thursday morning.
Shortly after 8:00 (0600 GMT) in early trade on the bond market, the yield on the 10-year German fell to 1.020% and the borrowing the same maturity of 1.412% in France.
The previous record for France dated from the day before and went back to Friday to Germany, on the secondary bond market, where previously issued debt exchange. As often in bad economic news Investors looking to take the least risk and look to the safest eurozone debt.
Paradoxically then they buy the debts of countries such as France considered solid, even the country will have trouble keeping its budget deficit targets, highly regarded by the markets and other European countries.
The publication of growth figures for the second quarter Thursday morning was confirmed as such fragility of activity in euro zone.
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