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French Consumer Confidence at All-Time Low, Unemployment at All-Time High

French consumer confidence reached an all-time low in June as consumers are more pessimistic than ever about their future living standards, data show on Thursday morning.

 

Consumer confidence, which came in three points below analyst expectations of 81 and far below a long term average of 100, was the lowest since records began in 1972, data from statistics office Insee showed.

 

These data suggest that the euro zone’s second-largest economy (20%), hit by lagging trade competitiveness and a new recession, will not be supported by its traditional driver which is domestic consumption.

 

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In June, households’ opinion about the expected general economic situation in France slipped. The corresponding balance kept decreasing, as it had been doing since January (–2 points with respect to May), and reached a new historically lowest level. Furthermore, their opinion about past general economic situation decreased again (–2 points), thus reaching its lowest historical value of October 2008.

 

The consumer confidence indicator has been worsening in parallel with jobless numbers, which edged up to a new all-time high of 3,264,500, labour ministry data showed on Wednesday evening.

 

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The number of unemployed people in mainland France was stable in May with a negligible rise of 100 people, just nudging the total to a new all-time high of 3,264,500, labour ministry data showed.
 
According to the data, which goes back to 1996, the number of unemployed people in France has never been higher. The previous record set in 1997 was broken in March of this year.

 

The problem is that the sickly growth will leave France’s 2013 public deficit near 4% of economic output, overshooting an already revised target of 3.7% and further away from an EU goal of 3%, the state auditor said in a report on Thursday morning.

 

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France has little chance of meeting its revised budget targets this year and will need to make a big effort to cut public spending if it is to meet a new deadline of 2015 set by Brussels for bringing the deficit below 3 per cent of output, the country’s national auditor has warned.
 

In a report that underscored the scale of the fiscal task facing President François Hollande’s socialist government, the Cour des Comptes said: “France is hardly halfway towards budgetary consolidation begun in 2011 and the easing of the timetable, justified by economic slowdown, does not allow for any relaxation.”
 

It said the likelihood that the economy would shrink this year, hitting tax receipts, meant there was only “a small chance” of achieving the current budget deficit target of 3.7 per cent of gross domestic product.

French President Support Falls to a New Record Low

According to a CSA barometer “Les Echos“, Francois Hollande’s popularity reached a new record low in June.

 

Only 28% of respondents trust him to confront efficiently today’s problems while 68% do no trust him at all. It’s the lowest level of confidence since Holande has started his mandate.

 

The improvement in May (+ 2 points) following the adoption of the gay marriage was temporary. The continued rise in unemployment, the return to recession and the upcoming debates regarding family benefits and pension reform have weighed on Hollande’s popularity.

 

This survey suggests that households’ confidence will fall again in June after reaching in May its lowel level since July 2008.

In May, French Consumer Confidence Fell to its Lowel Level Since July 2008

In May 2013, households’ confidence about the economic situation strongly declined, with the French statistics agency, Insee, saying its monthly synthetic confidence index lost 4 points to 79 falling to its lowest level previously reached in July 2008. The figure is well below the long-term average of 100.

 

 

This statistic confirms that the recession has persisted in France in Q2 2013 after GDP shrank by 0.2% in Q4 2012 and Q1 2013, according to the EU’s statistics office Eurostat.

 

Moreover, regarding the labor market, despite earlier this month, France passed a range of measures aimed at stopping the rise in unemployment by reforming the country’s labour laws, the consumer satisfaction survey also shows that French households believe the rate of unemployment in the country will continue to rise beyond France’s current rate of 11 percent.

 

As a consequence, the French economy, which represents about 20% of the Eurozone, could be a drag in Q2 offsetting the positive effect of Germany.