The yellow vest movement already took its toll on consumer spending which is now likely to decrease by -0.2% q/q in Q4 (as in Q2, after some previous strikes). As a result, GDP is expected to stagnate in Q4, resulting in +1.5% growth in 2018 overall. Moreover, the movement should have an impact on insolvencies. There were +700 additional business insolvencies in Q3 2018 as compared to the same quarter a year ago. We forecast +1000 additional insolvencies in Q4, taking the full-year number in 2018 to the same level as in 2017. The policy measures announced to end the strikes will have two key impacts. The cancellation of the fuel tax rise will add to the recent slowdown of the oil price and send consumer prices down to +1% y/y by May 2019 (from +2.2% in October). More fiscal measures (about 0.5% of GDP designed to increase the minimum wage and decrease social contributions for low incomes) were also announced. They should trigger a comeback to higher growth (+1.7% in 2019, with +0.5% q/q in Q1) but also threaten to post a fiscal deficit above the -3% of GDP threshold.
