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French economy stagnates in second quarter

The French economy ground to a standstill in the second quarter of the year, official figures published on Thursday (Aug 14) showed, further fanning fears that France could drag down a stuttering eurozone recovery.

PARIS: The French economy ground to a standstill in the second quarter of the year, official figures published on Thursday (Aug 14) showed, further fanning fears that France could drag down a stuttering eurozone recovery.

France's gross domestic product was flat in the second three months of the year, according to national statistics office INSEE, following zero growth in the first quarter. The figures prompted the finance minister to slash the government's forecast for growth in 2014 to "around 0.5 per cent" compared with a previous projection of 1.0 per cent.

Michel Sapin said that "growth has broken down, in Europe and in France." "With zero growth in the second quarter, thereby extending the stagnation we saw in the first, our country is slowing down and will not achieve the 1 per cent growth observers were predicting three months ago," Sapin wrote in an opinion article in the daily Le Monde.

"This year, growth in France will be around 0.5 per cent, and there is nothing that would allow us to forecast, at the moment, that growth in 2015 will be much above 1.0 per cent," he added.

Sapin also revised upwards the forecast for France's public deficit, saying it would be "above 4.0 per cent of gross domestic product" this year. France had forecast a deficit of 3.8 per cent this year and had promised the European Union it would get the deficit down to around the 3 per cent limit by the end of next year - a commitment that is increasingly unlikely given slow growth.

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