France, the second-biggest economy in the struggling eurozone, is set to tip back into recession by the end of the year, its central bank warned today.
The Bank of France predicts the French economy will shrink by 0.1% in the final quarter of 2012, following a similar decline between July and September, putting the nation back into a technical recession.
President Francois Hollande’s government predicts 0.3% growth this year and is counting on a 0.8% advance in 2013, although gloomier forecasts from the European Commission published this week predict France will grow at just half that rate next year.
The latest blow for France came after a bigger-than-expected slide for its industrial sector in September as output fell 2.7% over the month.
A downbeat survey of manufacturing business managers also warned of declining investment spending next year, and far smaller growth in investment this year than previously estimated. Germany will also see stuttering growth over the winter although the nation should avoid a return to recession.
Its economy ministry warned of an investment squeeze over the next six months as the economy slows over the winter. “As a whole there will be a noticeably weaker economic dynamic in the winter period,” the ministry said.
