Investment surge pushed French growth to 2% in 2017

Paris: The French economy grew by a stronger than expected 2 per cent in 2017, its best performance since 2011, in a year marked by a surprise acceleration in investment from companies and households, official data showed on Wednesday.
Buoyed by rock-bottom interest rates, a broad-based recovery among euro zone peers and lower payroll taxes, French companies bumped up investment to meet surging demand and more confident households returned to the property market.
The 2 per cent increase over 2017, a tad higher than the 1.9 per cent initially estimated, means France outpaced Britain, which grew by 1.7 per cent last year, although gross domestic product (GDP) fell short of the 2.5 per cent in the wider euro zone.
That marked a sharp acceleration from the performance of the previous five years, where the French economy flirted with stagnation, weighed down by mass unemployment and efforts to close a budget deficit via higher taxes.
The French government will take heart in the pick-up in investment, which bodes well for long-term growth.
Companies' investment increased by 4.4 per cent, while households' jumped by 5.4 per cent, mainly on the back of property purchases.
Although President Emmanuel Macron's pro-business government has pointed at surging confidence since his election, the previous Socialist government has been quick to claim its efforts to cut companies' payroll costs are bearing fruit.
The European Central Bank, whose bond-buying programme has pushed interest rates to record lows, encouraging companies and households to take up cheap loans and mortgages, could just as well take credit.
However, despite a 3.3 per cent rise in exports in 2017, foreign trade still shaved 0.3 points off French growth as a whole last year, because of a more rapid surge in imports, at 4.1 per cent.
In the fourth quarter, GDP rose by 0.6 per cent after growing 0.5 per cent the previous three months, INSEE said, leaving its quarterly estimates unchanged.