French central financial institution sees progress flatlining in fourth quarter

PARIS (Reuters) – French financial progress is ready to stall within the final three months of the yr however not retreat as some enterprise leaders concern, the central financial institution estimated on Tuesday in its month-to-month outlook.

Development within the euro zone’s second-biggest economic system was extensively anticipated to chill after reaching 0.4% within the third quarter, buoyed by an inflow of vacationers for the Olympic Video games in Paris over the summer season.

The central financial institution estimated that the post-Olympic pullback would scale back fourth quarter progress by 0.2 share factors, implying that the French economic system would in any other case develop 0.2% from the earlier quarter.

Nevertheless, the outlook is more and more murky following the collapse of Prime Minister Michel Barnier’s authorities final week over a price range dispute with opposition lawmakers.

The pinnacle of the Medef French employers’ federation Patrick Martin went as far as to say over the weekend that the economic system was in all probability already in recession.

The central financial institution’s month-to-month survey of enterprise sentiment prompt exercise was nonetheless increasing reasonably within the dominant service sector however was pulling again within the industrial sector and in a extra marked retreat in development.

Industrial corporations reported order books had fallen to ranges not seen for the reason that depths of the COVID disaster whereas producers had been working at 74.7% of capability, down from 75.2% the earlier month.

Executives polled indicated rising uncertainty concerning the outlook, particularly in business and development, the place it was the very best in two years.

That tallies with latest polls of enterprise sentiment which have proven corporations more and more shifting into retrenchment mode within the absence of readability about tax and broader financial coverage.

An IFOP survey for French debt restoration company ARC discovered corporations had been more and more attempting to carry onto money by reining in funding, decreasing hiring and taking measures to make sure shoppers pay on time.