The sign is unhealthy for the French economy. The Banque de France sharply lowered its forecast for growth for 2026. It now expects solely 0.5% development in GDP, in comparison with 0.9% nonetheless anticipated in March. And above all, she expects a zero growth within the second quarter, after an sudden decline of 0.1% within the first.
“The value of oil has elevated greater than within the March base case assumptions. However above all, exercise proved much less resilient than anticipated within the first quarter of 2026,” explains the establishment. Consequence: an exercise which “ought to stay comparatively sluggish within the second quarter”. In different phrases, the financial system is slipping.
A really unsure worldwide context
These new forecasts are available in a tense local weather. “Carried out in a very unsure worldwide surroundings”, they don’t even embrace sure latest occasions, such because the announcement of a potential settlement between the USA and Iran. Sufficient to additional reinforce the uncertainties. The hole can be widening with different expectations. The federal government continues to be concentrating on +0.9% development for 2026. For its half, the IMF was much less optimistic, with a forecast of 0.7%. The Banque de France immediately seems to be probably the most pessimistic concerning the financial trajectory.
Extra unhealthy information: inflation is on the rise once more. The Banque de France now forecasts inflation at 2.5% in 2026 (in comparison with 1.7% anticipated in March), “pushed by the rise in power costs and its oblique results”. A key issue that weighs on buying energy. In a central state of affairs, inflation ought to then gradual to 1.7% in 2027 and 2028, with an anticipated easing in power costs. However within the brief time period, the stress stays robust, in a context already marked by price pressures.
An anticipated rebound… however not earlier than 2027
The Banque de France, nevertheless, needs to be somewhat extra optimistic concerning the future. It forecasts a “rebound” in development to 0.9% in 2027, then 1.2% in 2028. This restoration can be pushed by family consumption and enterprise funding. However this state of affairs relies on many components. The establishment mentions a number of hypotheses, starting from an enchancment linked to a speedy drop in power costs to darker eventualities within the occasion of lasting tensions on the markets.
On the general public finance facet, the scenario stays fragile. The deficit “might deteriorate barely in 2026”, reaching 5.2% of GDP, after 5.1% in 2025. And this, “within the absence of extra financial savings measures”. Consequence: the restoration of public accounts can be “restricted” and the debt would proceed to extend. It might attain 122% of GDP in 2028. A stage which fuels considerations concerning the medium-term budgetary trajectory.
Cautious firms
Lastly, financial indicators affirm the slowdown. The survey carried out amongst 8,500 enterprise leaders reveals a transparent slowdown in business, with a decline in providers and development. The one nuance: a slight enchancment is predicted in June. However total, exercise stays fragile.
