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French economy stagnates as investment falls away

French Finance Minister Michel Sapin
French Finance Minister Michel Sapin Reuters/Eric Vidal

France’s economy has stagnated in the second quarter with investment falling away and consumer spending slowing sharply.

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Finance Minister Michel Sapin insisted Friday that the second-largest economy in the eurozone is still on track to post 1 per cent growth over the year as a whole, and stressed that there would be no major change in the government’s economic policy.

He also rejected the idea of further tax cuts for households in 2016.

"After a very dynamic first quarter, the level of activity has held up," he said.

Gross domestic product had risen 0.7 per cent in the first three months of the year but stagnated in the second quarter. Investment, meanwhile, rose only 0.2 per cent compared to 0.6 per cent in the first quarter.

Consumer spending also slowed from a 0.9 per cent rise in the first three months to only 0.1 per cent in the second quarter.

The contribution France’s exports made to the economy, however, rose 0.3 per cent, while imports slowed by 1.6 per cent.

Sapin stressed that the priority is to “stay the course”.

"It is perfectly legitimate to wonder about the best way for there to be more investment and more jobs," he told France Inter. "But if we want to succeed, we do not zigzag or change the policy.”

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