Fiscally profligate, moi? The eurozone’s second biggest economy has an unerring ability to glide under investors’ radar. But in truth the French economy sits somewhere between northern Europe’s triple-A team and that of the wayward south.

Like the latter group, it is highly indebted (to the tune of almost 80 per cent of gross domestic product at the end of last year, similar to Portugal) after years of living beyond its means. It, too, has promised to change its ways. But President Nicolas Sarkozy’s resolve is about to be tested: the French economy is more fragile than thought.

It is only a few months since Paris doubled its official 2010 growth forecast to 1.4 per cent. But figures released last week showed an economy barely standing on its own two feet as stimulus measures are removed. First-quarter GDP increased by just 0.1 per cent and domestic growth was non-existent: corporate investment continued to decline and consumer spending, which accounts for half of French output, stagnated in the face of near double-digit unemployment. Without an export pick-up driven by the weakening euro, the economy would have contracted by 0.3 per cent. The euro’s continuing slide – it briefly touched a four-year low on Monday – will provide more support to exports, though more than half go to elsewhere in Europe.

Taking its medicine, then, will be more unpleasant than expected. France’s pledge to reduce its budget deficit from 8 per cent of GDP back to the 3 per cent Maastricht ceiling by 2013 was based on growth assumptions that already look optimistic. So far, there is little pressure from bondholders: French spreads over bunds are only about 30 basis points. Yet if France wriggles out of its promises, it could have a damaging knock-on effect down south. Forcing through austerity measures is hard enough without having to watch your powerful neighbours party like it’s 2006.

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