1. Our 2022 outlook for French real household spending growth is positive, although growth is decelerating when compared to 2021. 2. Rising inflation is starting to impact real gains, especially in real wages. This will weigh on consumer spending in the short term. 3. We highlight further downside risks to the outlook over 2022, including more sticky inflation and the possibility of new Covid-19 variants, which could lead to the re-imposition of Covid-related restrictions or supply chain issues. We forecast real household spending in France to grow by 3.3% in 2022, decelerating from the estimated growth of 4.7% in 2021. However, we note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending growth contracting by 7.6% in 2020, creating a low base for growth in 2021.
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