France

The French economy will slow sharply next year in the face of Europe's energy crisis, with a risk of a "limited and temporary" recession in the worst-case scenario, the central bank said on Thursday, Reuters reported. The euro zone's second-biggest economy is on course for an expansion this year of 2.6% but growth will slow to 0.5% in 2023, the Bank of France said, under its reference scenario based on recent oil and gas futures prices.
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The French government is lowering the country's 2023 economic growth outlook, but sees no need to revise its budget deficit target as a result, Finance Minister Bruno Le Maire said on Tuesday, Reuters reported. Growth in the euro zone's second-biggest economy is now expected to slow from an estimated 2.5% this year to 1% next year, down from 1.4% previously, Le Maire told journalists as he outlined the main forecasts underpinning the 2023 budget bill due later this month.
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French power distributor Electricite de Strasbourg SA oversold large quantities of electricity due to trading errors earlier this week, a mistake that could cost the company 60 million euros ($60.3 million). The utility’s ES Energies Strasbourg unit made quantity errors on transactions on Tuesday and Wednesday amounting to 2.03 gigawatts and 5.75 gigawatts of electricity, the company said in a statement.
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French Prime Minister Elisabeth Borne urged businesses to cut energy use or face possible rationing this winter if Russia halts gas deliveries, Bloomberg News reported. “It’s urgent to stop any energy consumption that isn’t indispensable immediately,” Borne said on Monday in a speech to business leaders at a conference near Paris. If not “there could be brutal gas outages overnight and serious economic and social consequences,” she said, adding that “companies would be the first hit” by any rationing.
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The French Parliament approved an inflation relief package on Thursday that aims to prop up citizens’ purchasing power and help them deal with soaring consumer prices and energy costs, the New York Times reported. The package was split into two bills. The first, specifically designed to fight inflation with a raft of measures worth 20 billion euros, or about $20.4 billion, was passed by the two houses of Parliament on Wednesday.
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France needs to mobilise to prepare for the probable scenario of energy shortages this autumn because Russia is using cuts in supplies to Europe as a weapon in its war with Ukraine, French President Emmanuel Macron said on Thursday, Reuters reported. Speaking in a televised interview to mark France's national day, Macron said part of that mobilisation would involve French consumers and businesses scaling back their energy use. "We need to prepare ourselves for a scenario where we have to manage completely without Russian gas," he said.
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The French government is poised to pay more than 8 billion euros ($8.05 billion) to bring power giant EDF back under full state control, two sources with knowledge of the matter said, adding the aim is to complete the deal in the fourth quarter, Reuters reported. One of the sources said the cost of buying the 16% stake the state does not already own could be as high as almost 10 billion euros, when accounting for outstanding convertible bonds and a premium to current market prices. EDF and the economy ministry declined to comment.
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The French government will nationalize its financially-struggling nuclear giant Electricite de France SA to help it ride out Europe’s worst energy crisis in a generation, Bloomberg News reported. “The climate emergency requires strong, radical decisions. We need to have full control of the production and our energy future. We must ensure our sovereignty faced with the consequences of the war and the colossal challenges ahead,” Prime Minister Elisabeth Borne said during her policy speech in parliament in Paris on Wednesday.
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France’s public finances have reached an “alert level” amid rising interest rates, surging inflation and dwindling growth, Finance Minister Bruno Le Maire said, Bloomberg News reported. The candid warning comes as President Emmanuel Macron’s government seeks to negotiate a revised 2022 budget with opposition parties after he lost his majority at the National Assembly in elections earlier this month. “Not everything is possible, quite simply because we have reached an alert level for public finances,” Le Maire said on BFM TV Monday.
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French Finance Minister Bruno Le Maire said on Wednesday that the euro zone was "in the middle of an inflation peak" which would last until the end of the year "at least", but added there was still a lot of uncertainty, Reuters reported. Le Maire told Les Echos in an interview that he expects inflation levels to remain high until the end of 2023, adding that "even after 2023, inflation will be structurally higher than what we have been experiencing for the last few decades." Euro zone inflation rose to another record last month, boosting government bond yields.
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