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Bank of France Cuts Outlook, Sees Smaller Macron Stimulus Boost

Bank of France Cuts Outlook, Sees Smaller Macron Stimulus Boost

(Bloomberg) -- France’s economic outlook is deteriorating as a bleak global environment weighs on activity and President Emmanuel Macron’s stimulus delivers a smaller-than-expected boost, the country’s central bank said Tuesday.

The Bank of France said growth this year and next will be slightly weaker than anticipated three months ago, as will inflation. The economic downgrade partly reflects a smaller boost to consumer spending from Macron’s tax cuts.

Data2019 (new)2019 (old)2020 (new)2020 (old)
GDP1.3%1.4%1.4%1.5%
Inflation1.3%1.3%1.3%1.6%

The revisions are smaller than those delivered to Germany last week, though still serve as a warning sign for the euro area as France’s domestic strength was expected to compensate for some of the weakness in other countries. The gloomier outlook overall for the currency bloc already prompted the European Central Bank to keep rates low for longer and to consider restarting asset purchases.

Against the softer economic backdrop and Macron’s tax cuts, the Bank of France added to warnings about France’s public finances. It expects debt as a percentage of GDP to rise in 2019 and then stabilize at around 99%, above the government’s most recent official targets.

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Catherine Bosley

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