France's economy contracted 0.1% in the first quarter of 2021, revised official data showed today, marking a slip into recession as it struggled to recover from a pandemic-induced downturn.

The unusually sharp downwards revision from an initially reported expansion of 0.4% in January-March reflected a poorer than expected performance in the construction sector.

It marked a second consecutive quarter of contraction after the French economy shrank 1.5% in the final three months of 2020.

The revised figure from the INSEE statistics office underscores the challenges governments have faced in responding to the coronavirus pandemic.

French President Emmanuel Macron has spent tens of billions of euros to shore up activity and protect jobs as lockdowns to contain Covid-19 have temporarily closed businesses, especially in the services sector.

France and its European neighbours faced a fresh wave of coronavirus infections this year, prompting governments to reimpose strict curbs to contain the spread.

In a further sign of difficulties, household spending, the driving force of France's economic activity, fell 8.3% in April, at the start of the second quarter after President Emmanuel Macron ordered a third national Covid-19 lockdown.

The real disposable income of households fell by 1% in the first quarter while the savings rate dipped to 21.8% from a revised 22.7% at the end of 2020.

Covid-19 restrictions are now being unwound in France. Finance Minister Bruno Le Maire this week stuck to his growth forecast of 5% for 2021 and said the crisis was "moving behind us, though we must remain cautious".

Full year 2020 GDP was slightly better than expected with a contraction of 8% compared to a previous estimate of a fall of 8.2%, INSEE said.

The statistics agency also confirmed the public deficit stood at 9.2% of GDP last year.