Macron under pressure as French economy stalls after record-high inflation jump

The French leader won his second presidential term last week against rightwinger Marine Le Pen but is expected to face a tougher fight at the June parliamentary election, when he could lose his majority. To put Mr Macron under further pressure, on Friday official data showed that France’s economic growth unexpectedly flatlined in the first quarter as consumer spending dropped in the face of record-high inflation.

The INSEE official statistics agency said preliminary data showed no change in gross domestic product for January-March.

That signalled a sharp slowdown from the final three months of 2021, when the euro zone’s second biggest economy expanded 0.8 percent, which was revised up from 0.7 percent previously.

Inflation and first quarter GDP figures for the 19-nation euro single currency zone are due later on Friday.

While a slowdown in France had been expected, the reading was worse than expectations for growth of 0.3 percent in a Reuters poll of 24 economists, whose forecasts ranged from 0.6 percent to -0.1 percent.

Household spending, the traditional driver of French growth, fell 1.3 percent in the quarter as consumer confidence waned amid concerns over surging energy prices and the war in Ukraine, eclipsing any boost from an easing of COVID restrictions.

Inflation has soared from record to record in recent months, rising unexpectedly in April to touch a new high of 5.4 percent, INSEE said in a separate report on Friday.

The latest inflationary spike will offer fresh fodder to Macron’s opponents who accuse the president of not doing enough to protect consumers’ purchasing power heading into legislative elections next month that will determine whether he has a majority to govern for the next five years.

His current government has put together a 25 billion euro package of measures to help protect consumers’ dwindling purchasing power and consisting in large part of caps on gas and electricity price increases.

But that did not stop the cost of living from being a major theme in France’s presidential election this month, which incumbent President Macron won.

Senior Europe economist Jessica Hinds at consultancy Capital Economics said: “Although government measures have shielded households from the worst of the energy price rises, the broader rise in inflation will still take its toll on real incomes and spending.

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“One silver lining, at least, is that the French economy is less exposed to the Ukraine conflict than most in the euro zone, including Germany.”

Mr Macron has indicated that his first steps after the June vote will include further measures to help consumers such as subsidies for people on low incomes who have to use their cars, as well as an increase in pensions.

According to an Elabe opinion poll published on Wednesday, six out of 10 French people do not want President Macron’s party to win a majority at the June election.

The poll shows that 61 percent of French voters would prefer that parliament elections on June 12 and June 19 result in a majority of members of parliament in opposition to Mr Macron.

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That percentage rises to 69 percent among working-class voters and close to 90 percent among far-right and far-left voters.

Following President Macron’s win in presidential elections this month, his LREM ruling party hopes to win an outright majority again, as it had during Mr Macron’s first term.

If LREM and its Modem party ally do not win a majority, the French President would be forced to make a coalition agreement with other parties.

Far-left leader Jean-Luc Melenchon has said that he wants to be Mr Macron’s prime minister in a coalition government that could block or water down many of the reforms that President Macron wants to push through, notably the increase of the retirement age.