France pulled away from its European neighbours with growth of 7 per cent in 2021, the country’s fastest expansion for 52 years, as it rebounded back above pre-pandemic levels of output thanks to higher consumer spending.
The strength of France’s revival from the coronavirus pandemic, which dragged the country into a record postwar recession in 2020, is good news for President Emmanuel Macron, who is expected to seek a second term in April’s elections.
The French economic rebound continued in the final three months of last year, with growth in gross domestic product of 0.7 per cent from the previous quarter. That outstripped most economists’ expectations and outshone its larger neighbour Germany where the economy contracted 0.7 per cent in the same period, leading to full-year growth of 2.8 per cent.
“The French economy has rebounded spectacularly and that’s erased the economic crisis,” Bruno Le Maire, finance minister, told France 2 Television. “There are still some sectors that are having trouble, like tourism and hotels, but most are recovering very strongly and that’s creating jobs.”
Combined with stronger than expected growth in Spain, France’s resilient performance suggested the eurozone was likely to grow at a healthier than expected rate in the fourth quarter.
Martin Wolberg, senior economist at Generali Investments, said “we are going through a softer period but look like we will avoid recession in the euro area”. He predicted the bloc would grow 0.3 to 0.4 per cent in the fourth quarter, when those figures are released on Monday.
Spain’s economy also did better than expected in the fourth quarter, growing by 2 per cent and boosted by a strong rebound in services exports that mainly stem from tourism. However, the Spanish economy remained 4 per cent below pre-pandemic levels of gross domestic product, despite growing 5 per cent last year — its fastest growth rate since 2000.
Spanish 2021 growth was below the government’s 6.5 per cent forecast. Pablo Casado, leader of the opposition People’s party, said the numbers “confirm the worst recovery in Europe” and tweeted that the government should “stop lying to the Spaniards and review the forecasts now”.
Germany’s fourth-quarter contraction left its output 1.5 per cent below pre-pandemic levels and underlined how Europe’s largest economy has been hit by its greater exposure to supply chain bottlenecks and a weaker recovery in household spending. In contrast, the US economy was 3.1 per cent above its pre-pandemic level in the fourth quarter.
“The German economy went into hibernation at the turn of the year,” said Carsten Brzeski, head of macro research at ING. “Restrictions to tackle the fourth wave of the pandemic and the Omicron wave as well as higher energy prices dented private consumption.”
France, by contrast, has been boosted by a sharp rebound in consumer spending after coronavirus restrictions were eased last year, while also benefiting from its lower exposure to the global supply bottlenecks that have hit German manufacturers.
The French national statistics office said average growth in 2021 was its fastest rate since 1969, at the peak of the postwar period known as “les trente glorieuses”. The economy has bounced back sharply from its 8 per cent contraction in 2020.
The eurozone’s second-largest economy returned to its pre-pandemic level of GDP in the third quarter, it said. Germany is unlikely to hit that milestone until the second quarter and Spain is expected to do so even later.
In the fourth quarter, France’s economy was powered by a 0.4 per cent rise in household spending and a 0.5 per cent increase in investment, while changes in inventories also added 0.4 percentage points to growth. Trade, however, made a negative contribution of 0.2 per cent.
However, economists expect a slowdown in the French economy at the start of this year after daily coronavirus cases hit a new high of 500,000 this week and tougher rules required people to be fully vaccinated to enter many public places.
The number of Covid-19 patients in French hospitals has risen above 30,000 for the first time since November 2020, but a lower proportion of them are in intensive care than in previous waves of the pandemic.
The French government, which plans to loosen coronavirus restrictions next month despite the high level of cases, previously forecast the economy would grow 4 per cent in 2022.
Additional reporting by Daniel Dombey in Madrid
French economy boosts Macron with fastest growth in 52 years
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