Black clouds over France's economy
The unemployment rate in France is expected to rise this year to 8,2%, according to the median forecast of sixteen economists surveyed by Bloomberg News.
It is expected that the situation in the French labor market, the toughest since 2019, will increase concerns about the stability of the second-largest economy in the eurozone.
“We expect that in the coming quarters the slowdown in the labor market will ease, as we forecast a gradual revival of the French economy, and even its rebound later in 2027,” said Jean Dalbard of Bloomberg Economics.
The expert noted that economic uncertainties both local and global are hampering hiring plans among businesses.
Bloomberg also points out that France’s economy had shown “signs of weakness” even before the conflict between the United States and Iran erupted at the end of February.
“In the first quarter the unemployment rate rose to the highest level in five years, and gross domestic product recorded its first quarterly decline since the COVID pandemic,” we read.
Reuters reports that France may not achieve its deficit reduction target this year due to worsening growth prospects.
Moreover, it may also be forced to take additional savings measures.
French Finance Minister Roland Lescure lowered the government’s forecast for France’s economic growth from 0.9% to 0,7% for the current year.
“It is obvious, that our goal, which is a public deficit of 5%, is currently difficult to achieve. We will do everything we can to get as close to it as possible,” he said after a meeting with parliamentarians.
Budget Minister David Amiel said that to balance unplanned spending, additional cuts or freezes of €3 billion will be needed, in addition to the already implemented €6 billion.
“Local government spending also poses a threat to achieving the deficit target, and the finance ministry estimated a potential budget overrun of €2 billion. Lescure said that the second half of the year will be crucial,” Reuters reported.
The French budget bill for the next year will be presented in September.
France’s public debt, which has already exceeded 3,5 bn EUR, may cause further problems along with the upcoming presidential elections in 2027.
Source: Bloomberg.
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Euro rate on Monday, July 13
The euro to dollar rate on Monday, July 13 is at 1,14 USD.
As analysts from ING Think report, geopolitical events continue to leave their mark on euro rates.
“The rise in energy commodity prices has stalled the corrective rise in the EUR/USD rate that occurred last week,” it was reported.
“The EUR/USD rate could easily fall to 1,1360 and test the 1,1300/25 area this month, although we suspect it may turn out to be the lower bound of this summer’s range,” added.
Chart. Euro to dollar rate (EUR/USD)
Source: Trading Economics.
The euro to zloty rate reaches 4,32 PLN.
Chart. Euro to zloty rate (EUR/PLN)
Source: Trading Economics.
Also read: Dollar rate before a chance to break out? Expert: “Capital will flow back to USD”
See also: Dollar rate before a “nervous and dynamic” move, euro waiting to fall? Expert issued forecast for USD/PLN and EUR/USD
Sources: Bloomberg, Reuters, ING Think.
