France's economy is lagging behind the rest of Europe, showing weakness across the board. In this context, uncertainty regarding budget cuts appears to be returning, writes UNN citing Bloomberg.
Details
Gross domestic product growth of 0.6% in 2025 will be lower than the eurozone average for the first time in three years, according to forecasts by the French National Institute of Statistics and Economic Studies (INSEE) published on Wednesday. After growing by only 0.1% in the first quarter, GDP will grow by 0.2% in each of the next three.
The French economy seems out of sync with the rest of the continent. While activity in 2023 and 2024 was somewhat better than in other European countries, its growth engines are now running out of steam
This weak economic performance is another headache for the eurozone's second-largest economy as the entire region grapples with trade tensions, rearmament, and conflict in the Middle East.
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According to INSEE, there is also uncertainty about how Germany's increased spending will affect growth, while France's own fiscal plans remain unchanged before the government presents budget cuts in the coming weeks.
The expected announcements in early July could change the behavior of economic agents, leading to a recovery in confidence or, conversely, greater sluggishness
Household spending is already weak, and the savings rate is at its highest level in 45 years, excluding a brief period during the pandemic.
Even if purchasing power has been better protected than elsewhere, French households are spending cautiously
Addition
The next G7 summit will take place in France in the Alpine resort town of Evian-les-Bains. The meeting of the Group of Seven leaders is scheduled for June 2026.