Chart of the Week : France’s recession is right around the corner Chart of the Week : France’s recession is right around the corner Chart of the Week : France’s recession is right around the corner

Chart of the Week : France’s recession is right around the corner

Christopher Dembik

Head of Macroeconomic Research

Summary:  According to a Bloomberg poll released today, economists see an 80 % chance of a recession in the euro area in the next twelve months. In the same poll, more than half consider a second 75 basis-point rate hike is likely at the European Central Bank’s meeting in October. But some eurozone countries will navigate better in a recessionary environment than others. We expect France to be one of the most resilient euro area countries in 2023.

Click to download this week's full edition of MacroChartmania composed of more than 100 charts to track the latest macroeconomic and market developments. All the data are collected from Macrobond and updated each week.

No recession, really ?

In mid-September, France's Minister of Economy, Bruno Le Maire, denied the risk of a recession in France in 2023. The French government targets a GDP growth at 2.5 % this year (prior estimate at 2.7 %). This makes sense based on the most up-to-date data. The 2023 GDP growth has been revised downward at 1 % versus prior estimate at 1.3 %. This is overly optimistic, in our view. When we look at the INSEE business climate indicator and its main components, the economic slowdown is obvious (with the exception of the construction sector) – see below chart. The slowdown will accelerate in the coming months and could cause a recession. Last week, Barclays was the first international bank to forecast a recession in 2023 for France (GDP contraction of -0.7 %). This is our baseline too (GDP forecast at -0.2 %). A few days ago, the Bank of France published its three main scenarios for the French economy next year. A recession is one of them (expected drop in GDP of -0.5 %). The forecasts for 2023 range from +1 % to -0.7 %. This shows the high level of uncertainty regarding the trajectory of the economy next year. The forecasts will likely be adjusted more often than usual in order to reflect the evolution of the energy crisis in Europe and the risk of energy rationing.

What really matters is the depth of the recession

In the case of France, we are optimistic. The recession is unlikely to be deep and long. The Bank of England forecasts a contraction in UK GDP of minus 2.1 % next year. There is a broad consensus that the recession will be massive in Germany due to the reliance on Russian gas and the exit from nuclear power. In its economic bulletin of September, the Bundesbank is forecasting a deep recession : « Economic output is likely to decline noticeably in the fourth quarter [ following a slight contraction in Q3 ]. This should also be the case in the first quarter of next year ». That won’t happen in France. The expected drop in GDP will be lower than in most other European countries for three main reasons :

1) Generous automatic stabilizers (despite the introduction of a less generous unemployment insurance reform in 2019 which reduced insurance payouts for high earners and required people to work for longer before claiming benefits) ;

2) An healthy labor market (the rate of activity among people aged between 15 and 64 years old is at an all-time high at 73.5 % - this is the best indicator to assess the real state of the labor market);

3) With the exception of Germany, no other European government has been so spent so much to mitigate inflation and higher energy prices. The French government has done everything it can to accommodate households and companies (cap on energy prices and rent increases, higher pension, higher salary for civil servants etc.). According to our estimate, the total amount allocated to fight inflation already reaches more than €60bn. This includes €44bn already spent from September 2021 to August 2022 and about €17-18bn for the announced extension of several measures going into 2023. This will certainly increase more in the coming months. The « Whatever it costs », which started in 2020, is not over yet. For the sake of comparison, the stimulus plan to mitigate the economic effects of the Covid amounted to €100bn. France’s total anti-inflation will likely be close to this amount by the end of 2023, in our view. This raises questions about the level of public debt as a percentage of GDP. But this is certainly a necessary step to avoid a deep and long recession like in several of our European counterparts. 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.