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French economic growth lost momentum at the start of 2017, defying hopes that the eurozone’s second largest economy had proven broadly resilient to political risks as it headed for a key presidential election.

France’s quarterly GDP growth slowed to 0.3 per cent in three months to the end of March, from 0.5 per cent in the fourth quarter of 2016 and below a median forecast of 0.4 per cent from economists surveyed by Bloomberg. GDP growth in the fourth quarter was however revised up from 0.4 per cent.

Annualised growth clocked in at 0.8 per cent, according to a first official estimate from Insee – the worst performance since 2014.

France is currently between votes in a presidential election where the economy has taken centre. The final round vote next weekend will be fought between pro-EU, market friendly centrist Emmanuel Macron and the Frexit-supporting far-right Marine Le Pen.

The unpredictable race had generated significant market uncertainty earlier this year, but prospects for the economy could brighten as polls show Mr Macron will emerge as a clear victor in the race for the Elyseé Palace after five years of a Socialist government.

A former French economy minister under outgoing president Francois Hollande, Mr Macron is promising to revive growth and employment by freeing up labour regulations and cutting the tax burden on the self-employed. He has also vowed to push ahead with eurozone reforms and repair the Franco-German relationship in the EU.

Still, France’s first quarterly growth performance will prove disappointing after a host of survey data from French households and businesses have shown confidence levels at the highest since the eurozone crisis.

“Despite the fact that consumer confidence has slowly been recovering since 2015 and is now at levels not seen since 2007, the first quarter might have been dented by the political uncertainty” said Geoffrey Minne, economist at ING.

Insee said the slowdown was driven by stagnant household spending which moderated to grow 0.1 per cent from 0.6 per cent, while exports shrunk by 0.7 per cent after a 1.4 per cent climb in Q4.

In more encouraging news, investment growth accelerated to 0.9 per cent from 0.6 per cent. The overall GDP reading was in line with a forecast from the Banque de France, which expects annual growth to hit 1.3 per cent in 2017.

After years of lagging behind its major eurozone rival Germany, a measure of private sector growth in April shows the French recovery has managed to overtake the EU’s largest member state for the first time since the continent’s debt crisis this month (see chart below).

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