Posted on 01/29/2008 6:22:53 AM PST by TigerLikesRooster
French consumer confidence plunges
By Ben Hall in Paris
Published: January 29 2008 11:48 | Last updated: January 29 2008 11:48
French consumer confidence plunged to a record low in January according to officials figures published on Tuesday, reflecting deepening concern about financial market turmoil and rising prices.
The study by INSEE, the French statistical agency, found that household confidence dropped to its lowest level since 1987, when the series began.
The figures reveal the growing anxiety of French consumers, with record pessimism about future living standards and a growing reluctance to buy.
Mathieu Kaiser, economist at BNP Paribas, said willingness to buy goods had fallen to its lowest level for 10 years.
The INSEE survey was completed before last week’s sharp fall on European stock markets, and the discovery of a €4.9bn fraud at Société Générale, suggesting confidence could be even weaker in next month’s figures.
The credit squeeze and falling stock markets appear to have taken a heavier toll on French morale than in other EU countries, such as Germany.
According to a survey published on Tuesday in Le Parisien newspaper, 77 per cent of those asked thought the financial turmoil would have a big impact on French growth and 68 per cent said it would have a big impact on their living standards.
Heightened French concern about the repercussions of a financial crisis helps to explain President Nicolas Sarkozy’s desire to restore order to a system which he says has lost sight of its purpose.
“Unlike in Britain, where people are perhaps more philosophical, the turmoil creates an atmosphere of anxiety in France and that could hit confidence quite hard,” said an official in the finance ministry in Paris.
The French government now predicts the economy will grow by around 2 per cent in 2008, the bottom end of its range of 2 to 2.5 per cent. Ministers point to the underlying resilience of French companies and the continued buoyancy of the housing market as reasons why France may suffer less from a US slowdown and a credit squeeze.
Most private sector economists are more pessimistic, forecasting growth of between 1.5 and 1.8 per cent this year. They point to rising inflation, a slowing fall in unemployment and tighter credit conditions.
Concern about inflation in France remains particularly acute. Although, at 2.8 per cent in December, the French consumer price index is lower than in Germany, where it reached 3.1 per cent in the same month, it has risen sharply from 1.6 per cent in September.
I wonder what will happen if Americans are really depressed. French are all going to literally die?
Well, the government took their cigarettes away.
Consumer confidence does not necessarily translate into economic performance.
"News of a sharp 32-percent widening in the defict in November compared with the October figure came as Germany, a key French trading partner and the eurozone's largest economy, reported a gain in its trade surplus to the highest point since reunification in 1990. The data led analysts and officials to warn that France was suffering from an underlying fall in competitiveness, a point frequently made by commentators as the trade and balance of payments figures have worsened over the last two years. . . [can't blame] the subprime housing market crisis in the United States. 'The November figures reflect a loss of competitiveness that is intrinsic to French industry.' . . . [Mean while] Germany on Wednesday said its trade surplus edged upwards in November, beating analysts' forecasts for the biggest eurozone economy."
... and from what I've read of the European Monetary Union about the only way to compete within the EU is to reduce labor costs. Germany did that years ago.
Same problem in Spain, Italy.
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