President Emmanuel Macron’s World Cup high lost more of its sheen on Friday, with figures showing economic growth unexpectedly failed to pick up, reports Bloomberg.
While bad weather and strikes played a large part in the poor performance in the first half of the year, it means an end to the economic honeymoon for Macron, just as he could do with a boost to keep reforms on track and defuse a major political scandal within his inner circle.
For the second quarter in a row, gross domestic product expanded only 0.2 percent, crashing down from the 0.7 percent rate averaged in 2017. Economists expected an uptick to 0.3 percent growth in the three months through June.
Consumer spending, France’s main growth engine, is sputtering. It contracted in the second quarter for the first time in almost two years. In June alone, separate data showed households raised their spending only 0.1 percent, well short of expectations of a 0.6 percent rebound.
The figures are a blow to Macron, who briefly enjoyed a feel-good factor after the French soccer team’s victory in the World Cup two weeks ago. He’s also embroiled in a scandal over allegations his inner circle covered up an assault on protestors by his personal bodyguard.
Some ministers have warned the scandal could delay efforts to overhaul the economy. He’s already made progress on his policy agenda, but coming up is the public pension system – a mammoth task.
Finance minister Bruno Le Maire is still waiting for a date in parliament to present a wide-ranging bill designed to remove barriers to growth for small companies. He said the risk the plans could be blocked is “what worries me the most.”
The economy’s rough start to the year was partly due to bad weather and snowstorms, which hit output across Europe. While there’s been a general loss of momentum across many economies this year, France’s slowdown was exacerbated when rail workers staged industrial action to protest Macron’s plans.