GDP report: French incomes rise in Q1, fueling higher savings

The INSEE statistics agency said the eurozone’s second-biggest economy grew 0.3 percent in the three months to end March, down from a revised 0.4 percent in the fourth quarter, according to Reuters.

Households disposable income rose 0.9 percent after President Emmanuel Macron’s government presented a package of measures in December worth more than €10 billion ($11.2 billion) aimed at increasing the poorest workers and pensioners’ incomes.

Consumer spending, traditionally the motor of French growth, grew only 0.4 percent in the first quarter despite the efforts to boost incomes, up marginally from 0.3 percent in the previous quarter.

Instead of rushing to spend the extra cash, the GDP report suggests that households are instead setting it aside as the savings rate rose to 15.3 percent from 14.9 percent at the end of last year.

Macron rolled out the package in concessions to protestors who led a series of violent street demonstrations in Paris that saw some of the worst clashes with police and vandalism in decades.

Desperate to halt what has become the biggest challenge to his authority since his election two years ago, Macron followed up last month with a pledge to cut income tax by a further €5 billion.