France: household situation set to be better in 2022-2023 than before the crisis of… 2008

In 2021, average GDP growth in France reached 7%, beating projections (consensus of 5.6% in January 2021). After accelerating sharply in the first three quarters, activity slowed towards the end of the year. However, despite the Delta wave that hit France at the end of 2021, GDP continued to grow in the fourth quarter, exceeding its pre-crisis level. Since then, the lightning fast spread of the Omicron variant has plunged the global economy into uncertainty. The health risk will therefore continue to weigh on activity, requiring the continuation of (more or less strict) health restrictions, at least for the first part of the year. For now, and in the absence of stricter restrictive measures, the outlook for 2022 is nevertheless encouraging. The latest surveys conducted in December and early January reflected a degree of optimism among economic agents , despite the sharp acceleration in the rate of infections. H igh-frequency indicators also point to resilient activity at the end of 2021. In addition to the health risk, purchasing power, linked to changes in consumer prices, will be a central issue, further exacerbated by upcoming elections. Inflation ended 2021 at 2.8% (CPI), its highest level since 2008, and is expected to remain relatively high in early 2022 (around 2.5% on average in H1). Once the peak is passed, however, the fall in inflation and the good performance of the labour market will allow for a more sustained increase in purchasing power after two quarters of decline, supporting domestic demand. The investment outlook is also positive, supported by a solid demand outlook, the effects of the stimulus plans (at national and European level) and the transformation challenges linked to the energy transition and mainly decarbonisation. In this report, we focus in particular on the situation of households, which remains a decisive factor for the 2022-2023 growth scenario .