AN INDEX that monitors consumer confidence in France fell sharply yesterday, back to a low last seen during the midst of the financial crisis.
The measurement, conducted by the National Institute of Statistics and Economic Studies, registered a negative sentiment only seen previously in July 2008 as the country entered recession, two months before the collapse of Lehman Brothers. Markets had been expecting a small rise.
Confidence is now at its lowest point since France began surveying consumers in 1972.
The index had reached a two year high in May last year, when President Francois Hollande was elected. It has fallen by 13 per cent during his first twelve months in office.
Private consumption has traditionally been a particularly important aspect of the French economy, accounting for 65 per cent of growth. Private spending in the general euro area accounts for only 44 per cent.
Ipsos Mori also released data yesterday illustrating the extent of consumer gloom in France: only five per cent would describe the current state of their economy as good.
This proportion is similar to the struggling peripheral economies of the EU, comparable to four per cent in Italy and three per cent in Spain, while the respective figure for Germany is a buoyant 67 per cent.
Only three per cent of people surveyed in France expect an improvement in the country’s dismal economic performance in the six months ahead, the data showed. France officially entered recession again in the first quarter of this year.
Hollande has been beset with economic difficulties since defeating Nicolas Sarkozy last year. Support for the President has fallen to an average of around 25 per cent, and 3.2m people are now jobless and searching for work in France, a national record.
Credit rating agency Standard and Poor’s, which downgraded France at the start of 2012, suggested that it might move its outlook on the French economy to stable if it controls its debt to GDP ratio, which is set to rise to 94 per cent by 2015.