Debt crisis saps French business, consumer morale

Europe's debt crisis hit French business and consumer morale harder than expected in September, prompting the country's main business lobby to call for decisive political action to reassure investors and households as economists warned of stagnation. The INSEE statistics office's index of sentiment in France's manufacturing sector, often seen as a bellwether for future industrial output, fell to its lowest level since August 2010 and slipped below its long-term average.
After a strong start to the year, French growth stalled in the second quarter and the Bank of France forecasts the economy is still stagnant, with a forecast of just 0.1 percent GDP growth in the three months to end-September. Mirroring a drop in a purchasing managers' index published on Thursday, INSEE's index of business confidence plunged in September to 99 points, from 105 in the last reading in July, and below economists' average expectations of 102.