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With gloom gathering over Europe, France has given the eurozone a much-needed boost by beating growth forecasts for the last quarter.
French GDP expanded by 0.3% during October-December, new figures show, crushing fears that growth could have fallen to just 0.1%.
That matches France’s growth in the third-quarter, easing fears of a downturn.
Economists had been braced for bad numbers, following the ‘gilet jaunes’ protests that have gripped Paris for many weeks, with mass demonstrations, running battles with police, roadblocks and attacks on shops and cars
And indeed, consumer spending and investing did drop in the last quarter.
But France’s economy still pushed on, the INSEE stats office reports, thanks to a jump in exports.
Household consumption expenditures decelerated (0.0% after +0.4%), likewise total gross fixed capital formation slowed down (GFCF: +0.2% after +1.0%). Overall, final domestic demand excluding inventory changes decelerated: it contributed 0.1 points to GDP growth, after 0.5 points in the previous quarter.
Imports bounced back in Q4 (+1.6% after −0.7%) and exports accelerated significantly (+2.4% after +0.2%). All in all, foreign trade balance contributed positively to GDP growth again: +0.2 points, after +0.3 points in Q3. Conversely, changes in inventories contributed negatively to GDP growth (−0.1 points after −0.5 points).
The figures aren’t exactly superbe — France’s annual growth rate has dropped to 1.5% for 2018, from 2.3% in 2017. That highlight how the ‘euroboom’ has fizzled out.
Reaction to follow….
Also coming up today
US and China are due to resume their trade talks today; overshadowed by the criminal charges against Huawei.
The pound could be volatile today after MPs voted for Theresa May to return to Brussels to renegotiate the Irish backstop in her Brexit deal – something the EU has already said non, nein, and nee to.
Sterling took a small tumble last night, losing one cent against the US dollar as traders calculated that a no-deal Brexit is now more likely.
That’s likely to push shares in London up this morning (as a weak pound boosts overseas earnings).
America’s central bank is meeting to set monetary policy tonight. The Fed is likely to leave interest rates on hold, but it could highlight how the US government shutdown has hurt the economy.
Plus we get new UK borrowing data which may show a drop in mortgage approvals last month.
- 9.30am GMT: UK consumer credit and mortgage approvals data
- 10am GMT: Eurozone consumer confidence
- 7pm GMT: US Federal Reserve sets interest rates