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French Consumer Spending Rose On Tax Cuts In December

by Ulrika Lomas, Tax-News.com, Brussels

22 January 2003

Analysts have suggested that the increase in French consumer spending observed in December was probably the result of the 5% income tax cut introduced in the last quarter of 2002.

However, tax cuts this year are likely to be less spectacular, despite the government's determination to bolster growth in the face of EU criticism over its budget deficit. Speaking to the Bloomberg news service earlier this week, Anne Beaudu, economist with Credit Agricole SA predicted that:

'Consumption remains the engine of growth in France, but there are no more big tax cuts on the agenda and unemployment is still rising. Consumption will slow this year.'

However, clearly referring to fellow eurozone member, Germany's economic woes, Ms Beaudu added that:

'In France consumption is slowing, but it's not collapsing like in neighbouring countries.'

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