France: sharp tightening of financial conditions

All recent economic data point to a downturn in the French business cycle. The only exception is labour market conditions, which have rarely been so solid. Otherwise, everything else is pointing downwards: erosion of purchasing power (negative shock for household consumption), increased uncertainty linked to the energy crisis (negative shock for business investment), rising interest rates (negative shock for credit). Lending to the private sector was still buoyant in mid-2022 but...