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

·2-min read

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.

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.

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.

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%.

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