French economy grows with surge in business activity as country reopens

The French economy grew twice as fast as expected in the second quarter, the central bank said on Wednesday, as business activity surged after Covid-19 restrictions were lifted.

Published: 8 July 2021 08:21 CEST

French economy grows with surge in business activity as country reopens

The reopening of sectors including hospitality and tourism has provided a boost. Photo: Ludovic Marin/AFP

The Banque de France said that the eurozone’s second-biggest economy expanded by around 1.0 percent from the first three months of the year, while noting that supply bottlenecks and staff shortages had still combined to hobble the recovery.

The bank maintained a 2021 growth forecast of 5.75 percent, expecting activity to withstand the effects of a feared fourth wave of coronavirus infections.

The European Commission has estimated that the French economy will expand by 6.0 percent this year, the same figure floated last week by the national statistics agency Insee.

French authorities have remained a bit more cautious meanwhile, and are sticking for now to a full-year growth forecast of 5.0 percent.

“June was better than companies expected,” central bank general director Olivier Garnier was quoted as saying as he presented its latest monthly survey of company bosses.

Most industrial sectors showed improvement and there were strong advances in commercial sectors, especially among hotels and restaurants, the survey showed.

Several industrial sectors, notably aeronautics and automobiles, were still only at around three-quarters of the level seen before the pandemic however.

Tensions in supply chains and increases in the cost of raw materials were cited as factors holding activity back, especially in the automobile and construction sectors.

Hiring was a problem as well, with 44 percent of business leaders who responded to the bank survey highlighting problems finding qualified staff, in particular for construction and temporary work.

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“I don’t believe in the model… which would involve finding third countries on the African continent or elsewhere where we’d send people who arrive on our soil illegally, who don’t come from these countries,” Macron said.

“We’re creating a geopolitics of cynicism which betrays our values and will build new dependencies, and which will prove completely ineffective,” he added in a wide-ranging speech on the future of the European Union at Paris’ Sorbonne University.

British MPs on Tuesday passed a law providing for undocumented asylum seekers to be sent to Rwanda, where their asylum claims would be processed and where they would stay if the claims succeed.

The law is a flagship policy for Prime Minister Rishi Sunak’s government, which badly lags the opposition Labour party in the polls with an election expected within months.

Britain pays Paris to support policing of France’s northern coast, aimed at preventing migrants from setting off for perilous crossings in small boats.

Five people, including one child, were killed in an attempted crossing Tuesday, bringing the toll on the route so far this year to 15 – already higher than the 12 deaths in 2023.

But Macron had warm words for London when he praised the two NATO allies’ bilateral military cooperation, which endured through the contentious years of Britain’s departure from the EU.

“The British are deep natural allies (for France) and the treaties that bind us together… lay a solid foundation,” he said.

“We have to follow them up and strengthen them, because Brexit has not affected this relationship,” Macron added.

The president also said France should seek similar “partnerships” with fellow EU members.