Clear signs of recovery in French economy, say ministers
Paris, 8 July 2015
The Minister of Finance and Public Accounts and the Minister of the Economy, Industry and the Digital Sector made a statement on the situation of the economy.
After the acceleration in growth in the first quarter (up 0.6%), France has clearly entered a period of economic recovery. Economists and national and international institutions generally agree now on forecasting growth of at least 1% in 2015 and 1.5% in 2016.
The foundations of the recovery are becoming more solid and broader. There is no reason to believe that the difficulties Greece is experiencing will compromise this, because the influence of the Greek economy in trade is limited and since 2012 the Euro Area has equipped itself with mechanisms to prevent the risk of contagion.
After starting to rise again in 2014 (up 1.1%), household purchasing power is going to continue growing more quickly (INSEE [National Institute of Statistics and Economic Studies] anticipates a 1.9% increase in 2015), thanks to the slowdown in inflation and the stability of taxes, [both of] which will support consumption.
Exports should also rise again. According to the manufacturers polled by INSEE, general export prospects are at a 15-year high. Furthermore, exports have already gone up 3.8% in the first five months of 2015 compared to the same period last year.
The conditions are right today for businesses to commit to investment and employment projects. Supported by the competitiveness and employment tax credit and the Responsibility and Solidarity Pact, corporate profit margins have already recovered nearly two of the three percentage points lost during the crisis. At 31.1% in the first quarter of 2015, they are at their highest level since the beginning of 2011. Supported by demand, favourable finance conditions, margin restoration and the measures in the plan to support investment – particularly increased depreciation –, investment should get going again. In this way, INSEE considers that these measures will strongly support (up 0.6 of a percentage point) companies’ investment in manufactured goods in the second half of 2015.
This recovery that is under way, driven by strong consumption and renewed investment, will enable a gradual recovery in employment. In order to support this process, the government is increasing its action not only in the employment policies aspect, with the extension of the assisted contracts package to combat long-term unemployment, but also in the economic policy aspect, with the “Everything for employment” plan for very small businesses and Small and Medium-sized Enterprises. Individual entrepreneurs are benefiting in particular from a €4,000 bonus for recruiting their first employee in the coming year.
The government’s policy is beginning to take effect. It must continue to be implemented resolutely./.