French economy “locked in reverse gear”

baguetteBoth the French and the Greek economies saw their manufacturing sectors “mired in contraction” in April, according to the respected Markit survey.

The French economy is the second largest in the eurozone after Germany. The country’s manufacturing output declined for the 11th month in a row and the pace of decline was the fastest so far this year.

Markit also said unemployment levels grew for the 13th successive month in April.

Greece’s manufacturing demand slumped to its lowest point in 22 months aided by the fears that the country could default on its debt and leave the euro area. Greece is due to pay the IMF €200 million this week and €750 million later in May.

These problem areas also lowered average growth for the rest of the euro region which expanded but with a modest slowdown over the marked increase in March. Output in Germany also stumbled.

Chris Williamson, Markit's chief economist, said: “Warning lights are flashing particularly brightly over France and Greece, both of which saw accelerating rates of decline at the start of the second quarter. Weaker rates of growth in Germany and Ireland are also cause for concern."

Analysts are optimistic that the slower pace does not spell disaster for the area’s recovery. The continued low cost of oil should be helpful for growth as could the nascent European Central Bank’s stimulus programme of injecting €1.1 trillion into the economy.

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