French economy outpaces that of UK and US

Economic growth in France surged past expectations to its highest rate in two years.

Figures on Wednesday showed economic growth in France accelerated in the first three months of this year. In fact, it hit France’s joint-highest figure since 2011.

The French INSEE statistical office reported that the nation’s economy grew by 0.6 per cent in the first quarter of 2015, surpassing expectations for growth of 0.4 per cent.

Economic activity in France is now outpacing that of both the US and the UK as Europe’s recovery surges ahead. In fact, the Eurozone’s rate of growth was also higher than the US and UK.

Eurozone economy growth

Figures from Eurostat today showed that the Eurozone economy grew by 0.4 per cent in the first quarter of 2015, broadly in line with expectations. The overall figure was lifted by strong results from France (0.6 per cent) and Spain (0.9 per cent), while Germany also posted a robust 0.3 per cent expansion.

The report showed that the four largest economies in the Eurozone all expanded for the first time since the first half of 2010, with Italy - the Eurozone’s number three economy - beating expectations to record growth of 0.3 per cent.

However, more detailed figures illustrate that France’s recovery was driven by consumer spending rather than business investment, which is not as economically viable.

Nevertheless, France’s sharp acceleration suggests its economy will surpass the government’s one per cent forecast in 2015, according to IHS Global Insight economist, Diego Iscaro. However, this will fail to affect the French unemployment problem.

“We still do not estimate that the recovery will be strong enough to make a significant dent into France’s high unemployment rate,” he said.

High level of unemployment remains

France continues to suffer from a record high unemployment rate and seven consecutive months of declining business investment. Analysts note that the nation will have to maintain its expectation-smashing Q1 growth rate to reverse these trends.

Earlier this month, the governor of France’s central bank, Christian Noyer, noted that reforms and overhauls should be implemented during these periods of growth in order to make labour markets more flexible and to increase competitiveness.

“The French economy is not doing well enough,” said Mr Noyer. He also noted that the recovery means it “has a key opportunity to consolidate and extend the major reforms launched in recent years, many of which are insufficiently broad or still unfinished.”