French GDP up by 0.6 per cent

<p>A rise in corporate profit margins and strong household spending have led to positive results.</p>

A rise in corporate profit margins and strong household spending have helped contribute to an increase in French gross domestic product (GDP).

According to official figures released by the National Institute of Statistics and Economic Studies (INSEE), the GDP of France grew by 0.6 per cent in the first quarter of 2015.

In comparison, the French economy saw approximately 0.4 per cent in 2013 and 2014. Growth was stagnant in 2012, a year when French companies had the worst profit margins in the eurozone.

Corporate profit margins rose to 31.1 per cent and were the highest since the first quarter of 2011 after there was a cut in payroll tax.

The first-quarter rise in GDP was in line with preliminary estimates from the French statistics office.

A sign of economic recovery

Commenting on the latest figures, French finance minister Michel Sapin said that the positive results were a sign of economic recovery.

"INSEE confirmed the good growth figures of the first quarter, which show a recovery is underway and bolsters the government's one per cent growth target for this year," he explained.

Some economists are expecting an even higher level of growth, and forecasts are averaging around 1.2 per cent.

"The new margins must allow businesses to invest and hire," Mr Sapin added.

Greece 'masking' risks

While an increase in GDP is good news for the French economy, some experts are warning that problems in Greece are masking financial issues in other European countries – particularly France and Italy.

Both countries are facing 'mounting' problems of high debt, slow growth, unemployment, poor public finances and lack of competitiveness, reports the Financial Times.

The stronger-than expected increase in GDP hasn't helped to reduce the public deficit in France, which was 4.0 per cent of GDP in the first quarter – up 0.1 per cent compared to the last quarter of 2014.

France intends to push down the deficit to 3.8 per cent overall in 2015.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.