Business

France in double-dip recession as figures show first quarter worse than thought

May 28, 2021

France has suffered a double-dip recession according to revised official figures that showed it had a worse start to the year than previously thought.

Europe’s second biggest economy shrank by 0.1% in the first quarter of 2021, sharply revised from an initial estimate of 0.4% growth, statistical agency INSEE said.

It was the second consecutive quarter of contraction – the definition of a recession – after the economy shrank by 1.5% in the last three months of 2020.

French President Emmanuel Macron listening to people after they received a Pfizer COVID-19 vaccine at the vaccination center of Valenciennes, northern France, Tuesday, March 23, 2021. The French government has backed off from ordering a tough lockdown for Paris and several other regions despite an increasingly alarming situation at hospitals with a rise in the number of COVID-19 patients. (Yoan Valat/Pool Photo via AP)
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Emmanuel Macron’s government has spent tens of billions trying to shore up the economy Pic: AP

France had already been dragged into recession earlier in 2020 due to the pandemic, meaning it has now suffered a so-called “double-dip”.

By the end of March this year the French economy was still 4.7% below its level at the end of 2019, according to INSEE.

The latest revision, reflecting a poorer than expected performance for the construction sector, underscores the challenges faced by France and its European neighbours as they battled a fresh wave of COVID-19 infections this year.

President Emmanuel Macron’s government has spent tens of billions of euros to try to shore up the economy and protect jobs during the crisis.

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But a resurgence in cases resulted in the country going into a third national lockdown, spelling further difficulties for the economy with new figures showing household spending fell by 8.3% in April – the start of the second quarter.

The restrictions are now being unwound and Finance Minister Bruno Le Maire this week stuck to his growth forecast of 5% for 2021.

Chairs are stacked on the terrace of a restaurant during preparations for the reopening of restaurants in Nice as part of an easing of the country's lockdown restrictions amid the coronavirus disease (COVID-19) outbreak in France, May 18, 2021.
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Latest restrictions have started to ease

He said the crisis was “moving behind us, though we must remain cautious”.

Germany, Europe’s biggest economy, also contracted in the first quarter though a spell of growth at the end of 2020 meant it was not in recession.

Similarly, UK GDP shrank by 1.5% over the January-March period this year – thanks to the latest lockdown – but had grown in the fourth quarter, meaning it avoided a double-dip.

Overall, Britain’s economy shrank by 9.8% in 2020, worse than any other country in the G7 group of major advanced nations. French GDP contracted by 8%.