France is in "quasi-recession", a senior aide to President Nicolas Sarkozy said on Monday, adding Sarkozy was prepared to take further measures to boost growth despite a budget that leaves little room for manoeuvre.
French gross domestic product (GDP) fell by 0.3 percent in the second quarter, prompting fears that Europe's second-biggest economy would slide into recession -- usually described as two consecutive quarters of negative growth.
Sarkozy said on Thursday there would be no austerity package as it risked "making the recession worse", but French ministers have so far denied the country is in recession.
"We are now in quasi-recession. The question is whether it will get worse and last longer or not," Henri Guaino, a close aide and speechwriter to Sarkozy, told France 2 television.
Guaino cited the latest unemployment figures as one example of the current situation -- Economy Minister Christine Lagarde said on Sunday the number of job seekers had jumped by 40,000 in August, the biggest surge in 15 years.
The French government outlined its draft budget for 2009 on Friday and said it would fail to meet deficit goals agreed with the European Union, with rising debt and slowing growth leaving Sarkozy little room to boost the economy.
Next year's draft budget forecasts a budget deficit of 2.7 percent of GDP, up from a previous forecast of 2.0 and close to the EU's 3 percent limit.
Despite that, and Sarkozy's comment that "the (state) coffers are empty", Guaino said the president could still take additional measures to boost growth.
"If measures have to be taken, they will be taken," he said.