Falling consumption hits French economy

Falling household consumption caused French growth to slow sharply in the second quarter.

Falling household consumption caused French growth to slow sharply in the second quarter.

Data from statistics office INSEE confirmed the euro zone's second biggest economy grew 0.1 per cent over the previous three months.

It left unrevised a "flash" estimate of the headline figures released last week, showing growth slowed from a quarterly pace of 0.4 per cent reported for January-March.

The data reinforced analysts' scepticism about French finance minister Thierry Breton's forecast that 2005 growth could reach a maximum of 2 per cent - worrying news for a government which has pledged to lift morale and cut joblessness

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A breakdown highlighted the weakness of consumer demand, with household consumption falling by 0.3 per cent from the previous quarter compared with an 0.8 per cent increase in the first quarter.

High joblessness has made consumers concerned about the outlook for employment and growth, prompting them to cut back on spending.