France Cuts 2026 Growth Forecast, Concedes Deficit Target Out of Reach
France lowers its 2026 growth forecast to 0.5% and abandons its 5% budget deficit target, citing Middle East war fallout, drought and rising borrowing costs.
France has trimmed its economic growth projection for 2026 and acknowledged it will not meet its budget deficit target, Finance Minister Roland Lescure said on Friday, as a string of external shocks erodes the country's fiscal room.
Lescure said the government now expects the economy to expand by 0.5% this year, down from an earlier estimate of 0.7%, while keeping its forecast of 1.0% growth for next year.
The downgrade puts the government's plan to bring the fiscal deficit down to 5.0% of economic output this year out of reach. "The reality is that the budget was built on a 5% assumption. And the reality is that, today, 5% is no longer an option," Lescure told journalists. He did not offer a revised deficit figure.
The minister attributed the weaker outlook to what he described as four distinct shocks that have hit the economy this year. The fallout from the war in the Middle East and summer heatwaves and drought that reduced agricultural output have both dragged on growth, he said.
"I think it is reasonable to say that economic uncertainty has never been greater than it is today," Lescure said. "We are operating under tight budgetary constraints; there is no more fat to trim."
The softer growth and missed deficit goal complicate the government's effort to pass its 2027 budget in the coming months, with parliament deeply divided and parties hardening their positions ahead of a two-round presidential election in April and May.
Adding to the pressure, French borrowing rates have climbed in recent weeks as investors have singled out France as one of the weaker links in a global bond selloff, reflecting its weak public finances and repeated slippage on deficit-reduction plans. Lescure said France faced no difficulty issuing debt but conceded that it now costs more.