France has reduced its economic growth forecast for 2026 to 0.5% from 0.7%, with Finance Minister Roland Lescure warning that the government will also miss its target for narrowing the budget deficit.
The revision reflects a difficult combination of high energy costs, extreme weather, political uncertainty and rising borrowing expenses. These pressures have weakened activity and made the preparation of the next national budget considerably harder.
The government had aimed to reduce the deficit to 5% of gross domestic product this year. Lescure did not announce a replacement figure, saying the final estimate would be presented when the budget is submitted to parliament later in September.
Debt-servicing costs are now expected to reach approximately €65 billion, about €4.5 billion more than originally budgeted. That would make interest payments one of the largest items in public expenditure and leave less room for other priorities.
French bond markets have also reflected growing concern over the fiscal outlook. The additional yield investors demand to hold French debt has risen amid uncertainty about the divided parliament and the approach of the 2027 presidential election.
Household caution is another challenge for growth, as consumers face pressure on purchasing power and reduce discretionary spending. Weaker consumption can affect both businesses and tax revenues, further complicating deficit reduction.
The government must now find a budget formula capable of winning parliamentary support while reassuring investors that public finances remain manageable. The revised figures are likely to intensify debate over taxation, public services and the pace of fiscal adjustment.
Sources: Reuters: French growth and deficit outlook; Reuters: French consumer spending pressures.
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