French economic growth will lag the rest of the eurozone over the next two years as investment growth and external demand remain lacklustre. Meanwhile, meagre wage growth and high unemployment mean that household consumption � traditionally the key driver of the economy � will become less able to support growth. ...Beyond ---- we expect the structural inefficiencies of the French economy to result in an expansion of its trade and current account deficits. While France will benefit from a cyclical economic upswing in the eurozone, it is too early to tell if improving economic conditions will be enough to save President Francois Hollande from elimination in the first round of the presidential election. We expect the ---- budget, which is the last to be submitted by Hollande before the presidential election, to fall short of its deficit reduction targets as expenditure cuts are insufficient to outweigh the proposed tax cuts. Although we are likely to see a gradual increase in positive rhetoric towards structural reforms, Hollande is unlikely to become an ambi- tious reformer of the French model. While we expect some reformers will take baby steps in the right direction, the ability of Hollande to implement sweeping reforms will be restrained by divisions within his own party and core support base.
...--.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- Private final consumption, real growth y-o-y -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- f = BMI estimate/forecast. Source: Eurostat Public states presence in the economy will decline gradually over overthelongterm. ...Source: Eurostat Public states presence in the economy will decline gradually over overthelongterm. Fixed Investment: Aswehavehighlightedinpreviousarticles, fixed capital formation has declined from --.- of GDP to Net Exports: We expect net exports to subtract -.-pp on average from headline real GDP growth over the next five ---------. As the consumer story in France improves this -- Business Monitor International Ltd www.bmiresearch.com ...Fixed Investment: Aswehavehighlightedinpreviousarticles, fixed capital formation has declined from --.- of GDP to Net Exports: We expect net exports to subtract -.-pp on average from headline real GDP growth over the next five ---------. As the consumer story in France improves this -- Business Monitor International Ltd www.bmiresearch.com
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