France registers inadequate growth for last quarter

Confirming preliminary estimates, the fourth quarter data from the INSEE national statistics agency on Wednesday showed France achieved growth of 1.7% for the whole of 2011 and dodged the threat of a recession running up to the election.

Household spending, the traditional motor of growth in France's consumer focused economy, edged up 0.2% in the fourth quarter even though purchasing power grew only 0.1% when adjusted for inflation.

Limp purchasing power along with soaring unemployment top opinion polls as concerns for the voters ahead of an election that takes place in two rounds on 22 April and 6 May.

Sarkozy's Socialist challenger Francois Hollande said the economic situation in France remained "very difficult" with high unemployment and growth more or less at standstill.

Hollande, who polls say will beat Sarkozy, reiterated plans to call for changes in a euro zone pact on deficit control to include a pro-growth commitment. He also wants to create 150,000 state-aided youth jobs and payroll tax breaks for firms that commit to keeping older employees in their job while taking on job market starters at the same time.

The INSEE report showed fourth-quarter growth was underpinned by a 1.1% increase in investment from the previous quarter, revised up from a preliminary estimate of 0.9%.

Despite a record trade deficit last year, international trade provided a boost to France's €1.8 trillion economy in the final quarter of 2012 with imports falling 1.0 while exports grew 1.2%.

The positive contribution from trade helped offset the impact of companies running down their inventories with de-stocking knocking 0.8% from gross domestic product.