Figures released this week by INSEE the National Institute for Statistics and Economic Studies in France indicate that the French economy dropped by 0.8% in the first quarter of 2008 and an anticipated drop of 0.4% in the first quarter of next year may mean that France is heading into recession.

Rising unemployment figures and low confidence in the manufacturing industry have all contributed to the decline and latest figures predict that unemployment in France will rise to 8% by the middle of 2009 which could mean a further 170,000 jobs cuts.

One of the main causes of the decline is the slowdown in exports as many of the countries that France trades with are themselves affected by recession.

The car industry has been hit heavily with a dramatic decline of 14.1% in sales during November leading manufactures such as Renault, Peugeot and Citroen to decrease their production.

It is hoped that consumer spending one of the main contributors to the economy in France will start to rise in 2009 helping to negate the drop in exports.

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