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Concern grows as French economy struggles to recover

France's economy is in recession again – and that could spell more trouble for Europe.

The national statistics agency, Insee, said that gross domestic product fell 0.2% in the first quarter of the year. The agency also revised its data for the fourth quarter of last year, saying GDP fell 0.2%, up from a 0.3% retraction. A recession is defined as two consecutive quarters of negative growth.

The news comes on the first anniversary of president Francois Hollande's swearing in. During that year, he has had to deal with mounting economic problems.

France's economy has not grown significantly in nearly two years and European data show it was last in recession at the beginning of 2012. Economists say its high unemployment rate of 10.6% is more proof that its economy is in trouble.

A recession in France, the eurozone's second-largest economy, is likely to exacerbate problems around the region since it is a major market for its neighbours.

"We are in Europe, the eurozone countries are our main clients and our main suppliers, and when the environment around us is depressed, well, that's the main factor in the slowing of the French economy," French Finance Minister Pierre Moscovici said.

But France's problems also stem from high government spending, and sliding competitiveness among its companies. Household consumption and production of goods and services were both down, according to Insee.

Despite the grim news, Mr Moscovici said the government is maintaining its projection that the economy will grow 0.1% this year. The French parliament is poised to pass a package of work reforms that the government hopes will help stop rising unemployment and jumpstart the country's stagnant economy.

President Hollande has promoted the bill as one of his administration's signature pieces of legislation designed to overhaul the country's notoriously hidebound labour market.

It includes measures such as making it easier for workers to change jobs and for companies to fire employees.

Belfast Telegraph