Shock French slump as Airbus crisis bites (Ambrose Evans-Pritchard, 11/11/2006, Daily Telegraph)
The French economy slumped in the third quarter as the Airbus crisis began to exact its toll, dousing hopes that Europe would take over as world’s growth engine as America slows. Growth sank to zero with an accelerating twist down in September as car output fell 3.1pc and overall manufacturing slid 1pc, far worse than expectations.
The shock data comes as the yield curve on euro-zone bonds turned negative for the first time since 2000, flashing a warning signal that has often preceded recessions. France’s sudden downturn comes amid signs of flagging growth across the euro-zone following a brief burst of energy this year. Germany and Italy both face fiscal austerity packages in 2007.
Alexander Law, an economist at Xerfi, said France’s booming growth this summer was an illusion driven by de-stocking.
No one holds the Europeans in lower regard, but we refuse to believe that even they can be surprised by this.