France drops 2026 GDP forecast to 0.4% as neighbors grow
Insee and the French government have revised downward their growth outlook for 2026 to 0.4% and 0.5% respectively, citing stalled demand and rising unemployment.
France is falling behind its main European neighbors in economic activity while Germany, Italy, Spain, and the United Kingdom continued to post positive growth rates over the first half of the year. Insee, the national statistics office, warned that domestic demand has stalled, driven by weak household consumption and a slowdown in public projects linked to local elections. Heatwaves negatively impacted agriculture, and unemployment remained higher than across Europe. Consequently, Insee revised its 2026 GDP forecast from 0.7% to 0.4%, noting that the economy is losing ground after shrinking in Q1 and remaining flat in Q2. Economy Minister Roland Lescure adjusted the government's outlook similarly, cutting the 2026 projection to 0.5% and raising expectations for 2027 growth to 1%. Prime Minister Sébastien Lecornu admitted pessimism regarding his goal of reducing the deficit to 5% of GDP by end-2026. Inflation remains a concern, with projections set at 2.1% this year and 1.8% next year.
