Crédito y Caución forecasts that economic growth in France will stagnate at around 1,5% in 2019 and 2020, due to weak domestic demand and a slowdown in exports.
Business sentiment in France has been affected by social protests, labor market rigidity, and restrictions on production capacity. Corporate debt has grown to exceed 70% of GDP. The credit insurer's report warns that a further increase could make French companies more vulnerable to a change in monetary policy by the European Central Bank.
Public spending in France is equivalent to 57% of GDP, the highest percentage in the Eurozone. Since 2008, the central government's public debt has increased from 67% of GDP to almost 100%. However, the increase in fiscal spending in response to social protests will cause the budget deficit in 2019 to rise above the Maastricht threshold of 3% of GDP.
Following the declines from 2016 to 2018, Crédito y Caución expects a slight recovery in insolvencies in France in 2019, in line with economic stagnation. With approximately 55 bankruptcies, the year will close at levels similar to those recorded in 2008.
