French economy not in danger but deficit must be cut, central bank chief says
Moulin said the economy is worrisome but not catastrophic as INSEE cut 2026 growth to 0.4% and warned of weaker demand and investment.
- On Thursday, the national statistics institute INSEE downgraded its 2026 growth forecast for France from 0.7% to 0.4%, warning the economy is "slipping behind" after flat activity in the first half.
- Weak consumption and falling investment, combined with heatwaves affecting agriculture, have stalled domestic demand; Insee warned that "all the engines of domestic demand" are "seizing up" amid a labour market lagging behind Europe.
- Purchasing power is expected to fall by 0.4% as inflation rises to 2.9% by year-end, while households are dipping into savings with the rate dropping from 17.8% in 2025 to 17.3% this year.
- Weaker growth complicates the government's budgetary equation, straining the goal of bringing the deficit down to 5% of GDP from 5.1% in 2025; Prime Minister Lecornu admitted he is not "very optimistic" about hitting that target.
- Central bank chief Emmanuel Moulin said on Friday that the economy is "worrisome and unsatisfactory" but "not entirely catastrophic," stressing that France must act to reduce the public deficit.
46 Articles
46 Articles
After the Institut national de la statistique et des études économiques (Insee) on Thursday, which had revised its growth forecast for this year to 0.4% and alerted the French economy to a "drop-off" compared to its European neighbours, the government in turn presented a more pessimistic scenario than before. Sébastien Lecornu's government, which had already lowered its growth forecast to 0.9% in April (compared to 1% previously planned), and th…
France's economy was not in danger of catastrophic proportions, but its state of affairs was alarming and the Government should take measures, including those aimed at reducing public debt, said the head of the Bank of France, Emmanuel Mulen. "I would not say that France was in danger but was in a situation of concern," said Mulin, who was also a member of the Board of Governors of the European Central Bank (ECB), in an interview with RTL. "Ther…
France's growth is expected to reach 0.5% by 2026. Minister of Economy Roland Lescure announces a lower forecast than originally expected. He expects growth of 1% next year.
INSEE is rather pessimistic in its quarterly economic report published on Thursday 10 September. The French economy "decouples" compared to its European neighbours, with a forecast of 0.4% growth in 2026.
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