The Bank of France has presented a forecast for the coming years
The Bank of France has revised its forecast for the country’s economy in 2025. The regulator has lowered expectations for GDP growth from 1.2% to 0.9%. According to the estimates, the French economy will face a slowdown in growth next year.
Problems of the French economy
Several factors were the main reasons for the forecast revision. France has experienced political instability since 2024, leading to inconsistency in key decisions. Conflicts within the government and delays in taking necessary measures could put pressure on private-sector investment. In addition, global problems are having a negative impact on consumer spending, which is also affecting the country’s economic situation.
The head of the Bank of France, François Villeroy de Gallo, expressed concern about the problems that arose during the adoption of the budget at the end of 2024. At that time, the political forces split and could not come to a unified decision. As a result, the country faced a fiscal crisis.
At the same time, the central bank expects economic growth to resume as early as 2026. Analysts predict the following changes in the coming years:
1. GDP growth will be 1.3% in 2026 and a similar figure in 2027.
2. One positive factor will be wage growth, which will exceed inflation. This will improve the population’s purchasing power.
3. A negative factor for the economy could be the tendency for people to save more.
Concerns about this last point are related to consumer caution. They are still uncertain about the stability of the economy and prefer to have a financial cushion.
The government’s immediate goals
The country’s inflation rate will be 2.4% in 2024. In 2025, it is expected to fall to 1.6% and not exceed the regulator’s target of 2% for the next three years. In 2026, it could rise slightly to 1.7%.
Geopolitical risks will continue to pressure the French economy. However, a possible decline in global trade activity could minimise their impact. Experts point to the likelihood of the US government introducing tariffs, the effect of which on the French economy is currently difficult to assess.
Analysts’ concerns are also linked to Moody’s recent downgrade of France’s credit rating to Aa3. This is partly due to economic stagnation in the fourth quarter of 2024.
A key objective of the new French government for 2025 is to reduce the budget deficit. Last year, it was more than 6%, and this year, the authorities plan to reduce it to 5%. In addition, politicians want to cut budget spending by €50 billion. At the same time, the previous head of government set a target of €60 billion.
