By Hugh Carnegy in Paris
Update: Since we published this post, Chris Williamson, chief economist at Markit, has been in touch to say there is no significant divergence with Insee. There has been a lot of comment on this among economists in recent months so his take is important. Thanks to him for the contribution added at the bottom of the post.
Trying to work out exactly what is going on in France’s economy? Recently there has been a marked divergence between indicators from Markit and those from Insee, France’s statistics institute, with the former a good deal more gloomy than the latter.
This continues to be the case – but at least this month there is a bit of convergence, with Insee indicators level-pegging compared with December, while Markit’s figures show a three-month high.
France is aiming for a bank levy of €300m but ” would really like” €1bn, French finance minister Christine Lagarde has announced. Yikes. George Osborne’s feat — taxing the banks £2bn while reassuring them of a level playing field — seems a little less impressive. Might this put Mr Osborne off considering further bank levies?
Lucky for UK banks, then, that the UK levy is so small. And largely offset by corporation tax gains.
Today’s European Commission confidence indicators provide further reassurance that the region’s recovery remains on track. The eurozone’s economic sentiment indicator continued its v-shape rebound, rising to the highest since June 2008. But there are some interesting divergences – and not just between the big northern European economies and Spain, Ireland, Greece etc.
I was struck by the part of the survey covering manufacturers’ expectations for exports in coming months (which is included only four times a year). German industry is seeing optimism about overseas demand for its products soaring. January’s reading was the highest since the third quarter of 2007 and noticeably better than in the other main eurozone economies.
Is the economy doing better in Germany than in France? Or is it the other way around? Third quarter eurozone gross domestic product data indicated it was the former. German GDP rose by 0.7 per cent, compared with a measly 0.3 per cent in France.
But purchasing managers’ indices today still show France doing much better than its larger neighbour. The French composite index – covering manufacturing and services – stood at 59.8 in November. The equivalent reading for Germany was just 53.5. With the exception of a short burst in 2006, French private sector activity is growing at the fastest rate for about nine years
As a competition, it is not meant to be taken entirely seriously, but Christine Lagarde, France finance minister, is named today as the Financial Times’ European finance minister of the year. She was rated by the judges for her political skills – especially at global summits - and France’s economy has performed significantly better than most of its rivals during the crisis.
I am not so sure if the European Central Bank would approve of the choice.
French consumer spending is helping the country gain an edge over eurozone rivals, writes Ralph Atkins in a Financial Times blog