French confidence dips

October 23, 2008

, PARIS, October 23- French industrial confidence has fallen to the lowest level since 1993, the state statistics agency said on Thursday, as big employers warned of imminent business failures.

Official forecasts already show France in its second quarter running of negative growth — a technical recesssion — and Thursday\’s grim news added to  a mood of gloom hanging over prospects for a recovery.

"The financial crisis is endangering, sometimes threatening with death, many French firms, in particular medium, small and very small businesses," said the head of the employers\’ association, Laurence Parisot.

Parisot made her warning in a letter to Prime Minister Francois Fillon in which she urged him not to impose any new taxes or social charges and to drop plans to expand a scheme to make firms pay employee travel expenses.

"For all of us, what is at stake is avoiding a deep recession," she said.

Separately, the state statistics agency INSEE revealed a drop in its monthly index of business confidence from 91 to 88 points — putting it at its lowest level since 1993 — and warned of worse to come.

Bosses surveyed by the agency complained of shrinking order books, rising stock levels and an expectation of a further slowdown in the coming months.

The French economy shrank by 0.3 percent in the second quarter of the year and earlier this month INSEE forecast that gross domestic product would drop by a further 0.1 percent in both the remaining quarters of 2008.

Economists define a recession as two quarters running of contraction in the economy but so far the French government, despite revising downward its own growth and spending predictions, has steered clear of using the term.


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