China Business News Network "Because of rising energy prices, our school can't heat up the heating, so we will have two more weeks of vacation this winter. But what's worse is that the maximum temperature limit for heating this winter is only 19 degrees." Studying in France Xiaoxin complained to reporters. It has been four years since he arrived in France, and this is the first time Xiaoxin has encountered such a situation. The reporter learned in the interview that the University of Strasbourg , where Xiaoxin is studying, has extended the Christmas vacation from two weeks to three weeks this year, and after the winter vacation in February next year, there will be another full week as the distance learning week. . As energy prices continue to rise, swimming pools are closed, universities have extended holidays, public buildings are turned off at night... This is France in the midst of an energy crisis.
In fact, not only the energy crisis, but also the deterioration of foreign trade situation, weak industrial production, high inflation and other factors are threatening French economic activities, and future economic growth may stagnate. De Gallo, the governor of the Bank of France, said recently that economic growth in France and Europe will slow significantly in 2023, and a certain degree of economic recession cannot be ruled out, but the duration is limited.
“energy war”
French President Macron said in a video meeting with German Chancellor Scholz a few days ago that France is in an “energy war”, and the EU’s natural gas imported from Russia has been imported from China 50% of the total is reduced to 9%. The two most important issues in the coming months are ensuring that there are no blackouts in winter and keeping energy prices as low as possible.
The energy crisis is hitting French industrial production. French industrial production contracted by 1.6% in July, according to the latest data from the French National Institute for Statistics and Economic Research. Except for the refining and chemical industry, all other industries experienced production declines due to tight production conditions. After the summer break, more than half of industrial companies said they faced supply difficulties, and business energy expenditures increased by 2 to 3 times. Many French companies are facing difficulties in production, rising costs and declining profits, and the number of shutdown companies is increasing, with the metallurgical, steel, cement, petrochemical and food industries bearing the brunt. French industrial production is expected to shrink in the second half of the year, and industrial competitiveness will continue to decline.
In response to the energy crisis, various industries in France have started energy-saving models. First, many cities closed swimming pools, or shortened the opening hours, or lowered the water temperature. Many worry that indoor ice rinks and ski resorts will also close this winter or have to raise prices, shifting the cost of energy consumption on to consumers. Second, many restaurants and shops have shortened their business hours and even used candles for lighting. Third, the transportation system, as a major energy consumer, strives to save energy. Macron called on all French people to unite, volunteer to save energy, and achieve the goal of saving 10% by changing daily behaviors, such as setting the reference temperature for room heating to 19 degrees Celsius.
In addition to turning on the energy-saving mode, the French government is also trying to open source. It is reported that French electricity company will restart all nuclear reactors that are currently in a closed state before winter, and strengthen the "exchange of natural gas and electricity" with Germany and Spain. France and Germany also reached an energy exchange agreement: France will provide Germany with more natural gas, and in return, if there is a shortage of electricity in France this winter, Germany will send electricity to France.
Coping with high inflation
Since September last year, the French consumer price index (CPI) has risen to a record high, with a year-on-year increase of 5.2% in May, 5.8% in June, and 6.1% in July, both since 1985. highest level. French inflation eased in August to 5.8%, but remained high. This is expected to continue for several months, with no pullback until early or even mid-next year.
The latest report from the French UFC-Que Choisir consumer association pointed out that the price of household appliances and electronic products in France will rise sharply in the autumn of 2022, usually by double digits. The head of the association said, "Since the summer, inflation has involved all products including household equipment, and its price increase has not been seen in our survey."
And consumers can only reduce consumption levels to deal with inflation. Some French choose to go to cheap supermarkets to buy groceriesand daily necessities. In the past, many French people would choose to travel in summer, but in the face of unfavorable factors such as high prices, many French people choose to travel domestically this summer to spend the hot summer in the form of day trips or nearby tours.
In order to support the people to overcome the inflation peak, the French government has introduced policies to ease inflationary pressures. Public finance aid has halved French residents' energy bills, making France one of the smallest price increases in the euro zone. The French Parliament also passed the Government's Emergency Protection of Purchasing Power Act. The French government will support the people to cope with high inflation by providing housing subsidies, oil subsidies and other measures.
Economic activity slows down
The latest forecast by the French National Institute for Statistics and Economic Research shows that the French economic growth is expected to be 0.2% in the third quarter of this year and 0 in the fourth quarter, lower than the 0.3% forecast in June. Full-year growth is expected to be 2.5% this year and 0.2% next year. Economists, however, believe that economic activity in France will slow in the coming months, with growth expected to stagnate in 2023. French economists believe that the economic outlook for next year will mainly depend on the number of companies shutting production due to high energy prices and the actions taken by the European Central Bank. Analysis by
shows that in terms of investment, French companies will be more cautious in their investment in the coming period due to increased energy expenditure, supply shortages and rising interest rates; in terms of household consumption, the growth momentum of French household consumption has weakened since the beginning of this year; In terms of real estate, due to the increase in energy expenditure, the French people consume less in other fields, and rising interest rates will inhibit real estate investment; in terms of imports and exports, the latest data from French customs shows that France’s trade balance deteriorated again in July, with a deficit of 14.5 billion euros, compared with 14.5 billion euros in June. Imports grew faster than exports, driven by rising energy prices. It is worth noting that the EU's economic locomotive - Germany's economic growth in the second quarter was zero, as France's largest trading partner economy may fall into recession, which will have a negative impact on French exports. According to a report by Banque de France, , the current account deficit, including services, surged from 1.5 billion euros in June to 5.3 billion euros in July, while the services surplus fell from 7.1 billion euros to 5.6 billion euros.
De Gallo, governor of the Bank of France, pointed out in an interview with French media that 2023 will be a difficult year for France. He described the French economic trend with three "Rs": "Resistance" in 2022, "Ralentissement" in 2023, and "Rebond" in 2024. De Gallo stressed that the main problems in France are supply difficulties, inflation, energy shortages and recruitment difficulties.
Liu Xu
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