PARIS (Reuters) – French growth is expected to reach 0.9% in 2025, a slower pace than previously expected, under pressure from budgetary consolidation and political uncertainty, the Banque de France (BdF) announced on Monday. also lowers its growth forecasts for 2026.
In its latest macroeconomic projections, the central bank lowered its forecast for France’s gross domestic product (GDP) growth by 0.3 points next year compared to its forecasts published in September.
The growth forecast for the year 2024, however, is maintained at 1.1%.
The forecasts made on November 27, before the vote on the Barnier government’s motion of censure, were based on a finance bill which would have reduced the public deficit to 5% of GDP next year.
However, “less budgetary consolidation would not lead to excess growth, because the negative effect of increased uncertainty on household and business demand would work in the opposite direction”, warns the institution which specifies that its projections remain compatible with a more pronounced deficit in 2025.
The French economy should therefore emerge from the inflationary crisis without experiencing a recession, but the recovery would only take place in 2026 and 2027, later than previously anticipated, adds the BdF.
Growth is expected at 1.3% in 2026, compared to 1.5% previously expected, and at 1.3% in 2027, a recovery supported by the expected rebound in demand among European trading partners and the easing of the monetary policy of the European Central Bank (ECB).
The institution also notes that the exercise is complicated by geopolitical hazards, which are “always high”.
“Overall, the risks in relation to our projection are oriented downwards for growth, as well as to a lesser extent for inflation,” warns the BdF which has not integrated the risks of trade tensions into its forecasts.
Inflation should continue to fall in 2025 and settle at 1.6% before rebounding slightly to 1.7% in 2026 then 1.9% in 2027, a level close to the 2% target set by the ECB .
The BdF also warns that labor markets will slow down in 2025 and 2026, bringing the unemployment rate to 8%, before accelerating again thanks to the resumption of growth.
(Written by Corentin Chappron, edited by Augustin Turpin)
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