On Thursday, the French Central Bank said that the French economy is likely to slow sharply next year due to Europe’s energy crisis, with a potential risk of a limited and temporary recession in the worst-case scenario.

The bank said that the Eurozone’s second-largest economy is on course for an expansion this year of 2.6 per cent, but growth will slow to 0.5 per cent in 2023. However, the high uncertainty around energy supplies and prices implied the central bank preferred a range for economic growth next year between +0.8 per cent and -0.5 per cent.

The bank’s governor, Francois Villeroy de Galhau, said that if a recession occurs, it will be limited and temporary, with a sharp rebound in 2024.

In its latest forecasts in June, the central bank had pencilled in growth of 2.3 per cent this year and 1.2 per cent next year. The finance ministry meanwhile forecasted 2022 growth this week of 2.7 per cent and of 1 per cent in 2023. The central bank forecast on Thursday that growth would recover as energy market tensions subside, to reach 1.8 per cent in 2024.