The French Court of Auditors has said the eurozone’s second-largest economy could face significant macroeconomic shocks due to its €154 billion budget deficit and weakening public finances.
ADVERTISINGAccording to the French INSEE, the inflation rate in France was 2.3 percent in July compared to the same period last year, up from 2.2 percent in June and in line with analysts’ expectations. The increase is mainly due to energy prices, which rose to 8.5 percent in July, up from 4.8 percent in June. Gas prices recorded a significant increase, rising to 11.4 percent, up from -10.8 percent.
However, service prices fell to 2.5% in July, down from 2.9% in the previous month. Food prices also slowed, rising by just 0.5% in July, down from 0.8% in June. Tobacco prices remained stable at 8.7%, and prices for industrial goods also remained unchanged.
Prices for other services also fell in July, by 3.8%, down from 4% in the previous month. The main reason for this was the falling prices for cultural and leisure services, which fell by 4.3% in July, down from 5.2%. Prices for insurance services also fell by 7.4% in July, down from 7.9% in the previous month.
In contrast, prices for care, beauty and hairdressing salons rose by 2.2 percent in July, returning to the same level as in June.
The monthly inflation rate for July was 0.2%, up from 0.1% in June and also above market estimates of 0.1%. The increase was mainly due to a seasonal increase in accommodation and transportation prices, as well as a rise in gas prices.
France also has its unemployment Figures for the second quarter of the year came in at 7.3%, down from the previous three-month period’s figure of 7.5%. This was also down from analyst estimates, which were also at 7.5%.
The French economy could be exposed to economic shocks
The French Court of Auditors (Cour des Comptes) recently stated that the eurozone’s second-largest economy could potentially face significant macroeconomic shocks due to its €154 billion budget deficit and weakening public finances.
This is an increase from the public deficit of 125.8 billion euros in 2022. The Court of Auditors has stressed that it is crucial for France to take decisive steps to reduce the deficit as quickly as possible, as it could hamper other important investments and spending and leave the country vulnerable in the event of new macroeconomic turmoil.
The Olympic Games in Paris may have made a significant contribution to increasing the French economy. However, there is still considerable political uncertainty in the country following the recent elections, which has also unsettled the French stock markets.
