France economy will WEAKEN this year in DAMNING forecast for Macron by EU

The French economy has been plagued by the repercussions of anti-government protests in the city’s capital, with violence often erupting over what was initially sparked by rises in diesel costs. The ‘yellow vest’ street rebellion erupted last November and quickly developed into a broader backlash against economic inequality. President Emmanuel Macron last month vowed to take action to the ‘yellow vest’ movement with his plans including tax cuts, higher pensions and a reform of the civil service. Responding to the outrage, Mr Macron promised €5billion (£4.3billion) worth of cuts to income tax for lower and average earners.

But his plans did not stop the European Commission forecasting a slowdown for 2019, with Brussels predicting the economy will grow by 1.3 percent this year.

This is down on an expansion of 1.6 percent recorded in 2018 and the 2.2 percent growth seen in 2017.

In its forecast, the Commission confirmed temporary factors such as social protests had a detrimental impact on domestic demand in 2018.

The EC is anticipating a slowdown in exports for 2019, while unemployment is likely to fall to 8.8 percent.

It is also suggested that France will run a deficit this year of 3.1 percent of gross domestic product (GDP) off the back of Mr Macron trying to raise public spending.

France has gained a reputation as the world’s most highly taxed country with figures from the Organisation for Economic Co-operation and Development showing the nation’s ‘tax-take’ is equivalent to 54 percent of GDP.

Along with the tax relief, Mr Macron said government spending would be squeezed and the French would have to work longer to build up social contributions.

He said: “We must work more, I’ve said it before.

“France works much less than its neighbours. We need to have a real debate on this.”

In broader Europe terms, the eurozone economy is forecast to rebound next year from a slowdown in 2019 and unemployment will fall further, the EC also said this week.

However, the group is suggesting inflation is likely to stay at this year’s levels and below the European Central Bank’s target.

The Commission said the eurozone GDP would grow 1.2 percent this year, slower than 1.3 percent seen in February, and well below the 1.9 percent growth in 2018.

But it will rebound to 1.5 percent in 2020.

The Commission said: “In 2020, adverse domestic factors are expected to fade and economic activity outside the EU to rebound, supported by easing global financial conditions and policy stimulus in some emerging economies.”

They claimed French debt is likely to rise this year and ease marginally in 2020.

source: express.co.uk