2024-07-10 21:58:09
Growth is resisting in France, but for how long? Banque de France said on Wednesday that it expects an increase of 0.1% in GDP in the 2nd quarter, but pointed to “uncertainty” not seen before in 2022 among business leaders, linked to the political situation.
After increasing by 0.2% in the 1st quarter, GDP should grow half as fast between April and June, supported by a “moderate return” in employment in June, wrote the central bank in its latest monthly economic survey.
Conducted among 8,500 businessmen between May 26 and July 3, the survey above all shows the uncertainty of business leaders in the face of the political situation, marked by the early legislative elections of May 30 and July 7 The latter saw the New Elite Front (NFP) emerge in the second round and the National Rally significantly increased its delegation, without any clear majority in the new National Assembly.
Attention is at a high level
The Banque de France uncertainty index, based on the repetition of certain topics in the responses of investors, “reaches the highest levels since 2022, or even since 2021 in the case of jobs”, underlines the central bank . “It is progressing in all sectors, and especially in the services (especially temporary work, accommodation and food, transportation, advertising) where it was the least,” he explained.
“Many business leaders (…) mentioned a wait-and-see attitude on the part of customers, the delay of investments, including those from abroad, and the freeze on recruitment due to the lack of visibility on possible changes in cost salaries. ”, the NFP wants to increase the minimum wage by more than 200 euros to bring it to a net of 1,600 euros.
The uncertainty index however remains below the level reached in 2020 during the first two restrictions linked to the Covid-19 pandemic.
The Olympics as hope
This sharp rise in uncertainty among business managers is, however, not yet clearly visible in the performance of the 2nd quarter, explained the head of the Banque de France, Olivier Garnier. You can make more material in the 3rd quarter, especially if the Olympic and Paralympic Games should support the activity in the opposite direction.
According to the INSEE economic report published on Tuesday, the hosting in France of the largest sporting event in the world will contribute 0.3 points to GDP growth in the third quarter, or more than half of the increase expected between July and September (0.5%).
If Olivier Garnier anticipates the “positive effect” of the Olympic Games (July 26-August 11) and the Paralympic Games (August 28-September 8) on performance, he does not risk giving figures, preferring to comment on developments in the activity observed in the 2nd quarter.
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