France set to go back into recession

France – second biggest economy in the struggling eurozone – is set to tip back into recession by the end of the year, its central bank warned yesterday.

The Bank of France predicts the French economy will shrink by 0.1 per cent in the final quarter of 2012, following a similar decline between July and September, putting the nation back into a technical recession. President Francois Hollande's government predicts 0.3 per cent growth this year and is counting on 0.8 per cent in 2013 – although the European Commission earlier this week thought France will grow at just half that rate next year.

The latest blow for France came after a bigger than expected industrial sector slide in September, as output fell 2.7 per cent over the month. Germany's economy ministry also warned of stuttering growth there and an investment squeeze over the next six months.