The Bank of France has predicted that Europe’s second biggest economy is on the verge of sliding back into recession after predicting the country’s Gross domestic product will contract by 0.1% for the third quarter.
France had been one of the few countries in the Euro-zone to avoid the slide into recession and had given some hope that the Euro crisis would not engulf the entire region. If the bank of France’s prediction proves true it will be the second time the nation has fallen into recession in three years.
Since the Euro crisis began, France has struggled to regain momentum in its economy; confidence has waned as the risk of contagion grew ever higher. The uncertainty over the Euro has resulted in consumers spending less and demands for manufactured goods waning. The lack of spending has greatly hurt Frances car manufacturing industry, the nation’s biggest sector with car sales down 7% and leading to the closure of a number of factories.
The level of unemployment has also risen reaching the 10% level and large numbers of workers complaining that their hours have been slashed. If the prediction proves true then Franc will join Greece, Spain, Italy, Ireland, Portugal, Belgium, Holland, Cyprus, Denmark, Czech Republic and the United Kingdom in the list of European nations in recession. Worryingly Germany posted weaker than expected manufacturing figures posting a contraction. If Germany enters recession then the rest of the Eurozone will surely follow, adding to the woes of the single currency.
The Socialist government of Francois Hollande has so far proven powerless in the face of the economic tidal wave threatening to hammer the nation. The French economy has deteriorated on every front since they took power and forced them to cut their growth forecasts for the year from 0.4% to 0.3% and down from 1.7% to 1.2% for 2013. Even these slashed figures are being touted as highly optimistic by the international monetary fund and financial institutes.
The Pound to Euro exchange rate is currently trading at 1.260
The Pound to US Dollar exchange rate is currently trading at 1.558
The Pound to Australian Dollar exchange rate is currently trading at 1.477
The Euro to US Dollar exchange rate is currently trading at 1.236
The Euro to Pound exchange rate is currently trading at 0.792
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