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French growth slips despite Macron's pro-business push

© GETTY IMAGES NORTH AMERICA/AFP/File | It may be too early to gauge the results of Macron's pro-business push

PARIS (AFP) - 

France's economic growth decelerated sharply in the first quarter according to government estimates published Friday, but economists believe the blip is temporary as President Emmanuel Macron pushes a business-friendly agenda.

National statistics agency INSEE estimated growth between January and March at 0.3 percent compared with the same period last year, a steep drop from expansion of 0.7 percent in the last quarter of 2018.

The agency blamed a fall in household consumption after five consecutive quarters of growth at 0.5 percent or higher.

Household spending only rose 0.2 percent in the first three months of the year despite a rise in energy consumption due to the "Beast from the East" cold snap that swept through Europe.

Growth in company investment also dropped from 1.6 percent to just 0.5 percent despite ex-banker Macron's campaign to make France an easier place to do business.

Elected in May on a centrist platform, Macron has pledged to invigorate the economy, cutting taxes for businesses and wealthy investors and shaking up France's famously rigid labour code.

French economists had widely predicted a dip in the first quarter and do not expect it to impact on overall growth for the year, forecast by the government at two percent.

"The slowdown in growth is not a sign of a reversal in the economic situation or the end of a cycle. The underlying conditions are still good," said Mathieu Plane of the OFCE economic observatory at Sciences Po university.

"Measures having a negative impact, like a rise in social security contributions, came into force at the start of the year, while those that are good for purchasing power like a cut in residents' tax will come in at the end of 2018."

The OFCE predicts a sharp rise in growth towards the end of 2018 as a series of tax cuts kick in.

© 2018 AFP