The “yellow vests” (gilets jaunes) movement made the French government panic and change its budgetary policy, setting a new deficit for 2019 of 3.5%, which now seems possible.
France faces a narrow path to reconcile supply-side structural reforms and fiscal measures with demand management. The budget bill for 2019 targets a deficit at 2.8%, pretty close to the EU limit. But analysts at BoAML do not share the criticisms over lack of ambition on public spending.
The French football team was proclaimed FIFA World Cup Champion two weeks ago in Moscow. Far for the epic victory- we all witnessed PM Emmanuelle Macron’s euphoria- Philippe Wächter, Chief Economist, Ostrum AM wonders in a note to investors whether a football win could propel France into the leading position in Europe in terms of growth too. And looking to the euro area at large – whether it could make up for Germany’s defeat in the early stages of the competition and Spain’s poor performance.
As explained by as Philippe Waechter, Chief Economist at Ostrum AM, during the first quarter, growth was robust in the US and in Spain, slightly lower than expected in France and weaker than anticipated in the United Kingdom.
Robust economic growth in France in 2017, coming in at 2%, helps ease the restrictions on public finances. The other point worth noting is that the government must use surplus income, or what is known in France as the ‘funding pot’, to rebalance public finance rather than embark on fresh spending measures if it really wants to prove its commitment on public finances.
Spain has strengthened the supply of natural gas to Europe via France, consolidating its position as a transit country for this fossil fuel, at a time of high demand on the continent due to the cold spell which is affecting a lot of neigbouring countries.
There are repeated calls for more consolidation in the European banking sector. The Bank of France has it clear: strength comes from the European banks merging with their neighbours on the continent.
Since its creation in 1945, the CFA Franc is considered as “an insult to the sovereignity of the African countries”, according to numerous experts. The offensive against this currency resurfaced on the eve of the last French elections. The leading politicians felt themselves obliged to comment on the issue.
French coverage of the Catalan independence referendum has something of the left-right split we saw in Germany, but most of the media are united in calling on Catalan and Spanish leaders to meet each other in the middle.
France’s new, more liberal regime could refuel the polemic yet again over the necessity or otherwise of the government having an investment portfolio as it does at the moment. This “holding” is valued at close to 80 billion euros.