What France’s inflation and unemployment rates could mean for Europe

Tourists near the Eiffel Tower, Paris, November 2023.
Tourists near the Eiffel Tower, Paris, November 2023. Copyright MIGUEL MEDINA/AFP
By Heloise Urvoy with AFP
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Inflation keeps shrinking in France while unemployment continues to climb - a trend observed since the beginning of the year. Could Europe soon see a similar scenario?


France’s inflation rate is following a similar downward trajectory to Europe’s, with a continuous drop throughout 2023.

The French statistical office Insee confirmed on Wednesday that inflation stood at 4% for October, down from 4.9% in September.

Energy is the sector playing the largest role behind the figures, with a 5.2% increase in energy prices in October, down from a staggering 11.9% at the same time last year.

Inflation data for the EU and eurozone is following a similar path, with easing energy prices being the main driver of shrinking inflation.

Unemployment rises due to the state of the global economy

Insee also published France’s unemployment figures for 2023’s third quarter (Q3) on Wednesday, confirming the trend seen throughout 2023: joblessness is on the rise.

France’s unemployment rate climbed to 7.4% for Q3, up from 7.2% in Q2 and 7.1% in Q1. While it won’t yet trigger any alarm bells, this slight increase could become a longer-term tendency.

France’s central bank estimated unemployment will continue to increase slowly, reaching 7.8% in 2025.

Analysts and politicians alike have blamed the state of the wider global economy for France’s unemployment figures.

“We’re in a phase when the unemployment rate is beginning to turn in the wrong direction,” economist Mathieu Plane told AFP.

“We could expect such an increase due to the global economy’s slowdown,” French employment minister Olivier Dusspot said in a statement.

In October, the International Monetary Fund (IMF) explained the global economy was “limping along”, noting that the “slowdown is more pronounced in advanced economies”.

On Wednesday, the European Commission revised its Eurozone growth estimates, with +0.6% for the area’s GDP in 2023 instead of +0.8%, and +1.2% in 2024, instead of 1.3%.

EU Commissioner for Economy Paolo Gentiloni pointed to the “weak global demand” in a statement.

Gloomier forecasts of Europe’s economy could spark concern that unemployment could soon rise up across the continent,mirroring the current situation in France.

The EU’s unemployment rate stood at 6% in 2023’s third quarter, like in Q2. It also remains stable in the eurozone, at 6.45% for Q3, unchanged from the previous quarter.

So far, Eurostat data shows a stabilisation of the sharp post-pandemic unemployment drop across Europe - as was the case in France before the current increase.

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