The French economy will stagnate in the last quarter of the year, the Bank of France said on Wednesday, the latest sign it is losing momentum as fiscal austerity and Europe's debt crisis depress private sector activity. The forecast, the central bank's first for that period, was made in its monthly business climate report, which highlighted further weakness in the services and industrial sectors in October in the eurozone's second largest economy.
Slowing growth has forced the government to announce a new round of tax hikes and budget cuts worth 65 billion euros over five years so that its deficit-reduction targets remain within reach. The Bank of France said the sentiment indicator for industrial activity had fallen in October to 96 from 97 in September while its index for the services sector fell to 95 from 96 the previous month.
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