The end of the degradation of the economic activity, in France, during 2016 final quarter, is it the signal announcing, at last, growth comeback in 2017? For the time being, nothing is sure. French economy is stagnating for four years. Last estimations of 2016 GDP growth, 1.2%, shouldn’t create illusions. 2016 was a bissextile year with, a top of that, three public holidays occurring on a Sunday. The rebound, forecast for the 4^th quarter, will more reflect a catching up after the previous six months stagnation, than the signal of a durable trend. But that catching up will have a modest extent since foreign trade will continue to bring a negative contribution to growth in 2017. Last published figures, from September to November, reflect the continuous stagnation of exports and a new growth of imports. The deficit for these three months is superior to 14 billion euro, about the same amount than during 2014 1^st quarter when oil price was more than the double of what it was these last three months. The  degradation of our agricultural and industrial balances has almost offset the benefit France took from the reduction of its energy bill. So, it is difficult to claim that the policy followed during the last four years has contributed to improve the competitiveness of the French economy.

This situation has little chance to reverse this year. Oil prices rebound and the increase of fossil fuels due to the low availability of nuclear plants combined with cold weather will contribute to increase again the energy bill. Nothing authorizes us to think that non energy balance trend will reverse. The negative contribution to growth in 2016 was superior to 1%. International environment with the first decisions of the Trump administration and the uncertainties which will last regarding the “Brexit” implementation will not be, in 2017, more favorable for French companies than in 2016. Trade deficit will become worse.

2017 will also be a year with heavy uncertainties inside the country. Studies about household as company feelings, at the end of last year, are reflecting some more optimism. But, until now, that has not generated a significant change in their attitude. After a good start in 2016, investment stagnated during the last nine months. Priorities are still in favor of distributing dividends and share buybacks which reached, in 2016, a record and which will be increased again in 2017, due to the improvement of operational margins. Regarding households, in spite of historically low interest rates, they are still saving, and even hoarding: their financial saving rate reached a record with 5.9% of their available income during 2016 3^rd quarter. But the fall of borrowing costs had also a positive impact. Indebted families had the opportunity to renegotiate their credits, which generated a reduction of their annuities and a gain of their available income. The very strong rise of new credits is also the result of the rebound of the building activity. For the first time in four years, we see a rise of housing starts, unequal among areas, but which, globally, was superior to 10% in 2016. The activity of the construction sector will profit of it and it should last since housing permits, which are a good advanced indicator, are also on the rise. The consequences, in terms of jobs creation will be positive but less than in the past because of the use of detached workers which will weight on the recruitment of job seekers.

The persistent high level of unemployment as the uncertainties related to the political agenda should, on the contrary, weight on households consumption. Wages and pensions stagnation, at least during the first half of the year along with the already announced increase of some prices on the energy sector or for public services will generate a reduction of the purchasing power which will be negative for the activity as the reduction of public expenditures. Already announced major investment programs in Paris area and new highways in the country will have their full impact only in 2018 and will not offset the fall observed during the last two years.

With an unchanged economic policy, 2017 will be, in the most favorable case, i.e. without any major international crisis, the strict continuation of 2016, the negative impact on purchasing power of energy prices increase being compensated by the maintenance of low interest rates, even if these ones will slightly increase, by around 0.5% compared to previous year, which will support home acquisitions. Regarding companies, without a rebound of demand, they will use the reconstitution of their margins in investing, only in a very limited scope of activities, like the car industry, and they will prioritize the reduction of their debts and the distribution of their profits to shareholders.

The examination of the proposals of the candidates to the next presidential election does not permit to bet on a more dynamic economic policy, at least on the short term. It is the opposite. About fiscal issues, the consequences of some measures depend of the calendar of their coming into force, at the best, during the 4^th quarter. Any sharp VAT rise will necessarily and immediately weight on consumption but any tax cut on revenues or on wealth will have no impact before 2018. Regarding tax reductions or diminution of social charges in favor of enterprises, recent experience shows that without demand, they are unable to generate investment and, a fortiori, job creations. On the opposite, the election of a candidate having extreme proposals, as, for instance, the exit from the eurozone or even from the European Union, will immediately have very negative consequences. In that perspective, households will try to protect their assets in taking their cash out of the banking system and will adopt a wait and see attitude. A radical social policy, targeting working time and the related remuneration, pensions and health expenditures reimbursement, will unavoidably generate social conflicts, being supported by a large part of the population, like what happened in 1995, under Juppé government. In that case, this will also weight on economic activity during next autumn.

So, as a conclusion,three scenarios are possible for this year. A major international crisis, with unforeseeable consequences on the French economy, bumps affecting economic behavior of economic agents provoked by the political choices of any new administration, or the prolongation of the current trends, with the first signs of a possible rebound coming in 2018. In any case, 2017 will not be a year when spontaneously or due to new economic choices, the French economy, through a rebound, will get back a “normal” growth rate.