Real GDP growth slowed to 1.5% yoy in 3Q, from 1.7% yoy in 2Q. A year ago, we thought growth would be driven by household spending, with a minor rebound in investment and exports. However, external demand has been weakening and investment has stagnated. Going forward, we expect consumption to be the main driver of growth, but negative real wage gains and a very expensive housing market suggest that consumption growth will be stable at best.

Our recent visit to Paris confirmed that the reforms introduced by President Macron have underwhelmed in terms of economic effects, and we saw minimal to negative expectations for the future impact of the SME package that is under review currently.