France Cuts 2026 Growth Forecast to 0.5%, Deficit Target at Risk

France has lowered its economic growth forecast for this year to 0.5%, down from an earlier projection of 0.7%, Finance Minister Roland Lescure said on Friday, while maintaining the outlook for next year at 1.0%.

The downgrade raises doubts over whether the government can meet its target of reducing the fiscal budget deficit to 5.0% of economic output this year. Slower growth typically weighs on tax receipts and makes deficit reduction harder.

Lescure attributed the weaker outlook to a series of shocks that have hit the economy. These include the economic fallout from the war in the Middle East and a run of summer heatwaves and drought that damaged agricultural output.

"This year has been marked by extreme crises involving four different types of shocks," Lescure told journalists.

He also stressed the limited room for manoeuvre on public spending. "We are operating under tight budgetary constraints; there is no more fat to trim," he said.

The revised forecast complicates the government's effort to secure passage of its 2027 budget in the coming months. France's parliament is deeply divided, and parties have hardened 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. Investors have singled out France as one of the weaker links in a global bond selloff, pointing to its weak public finances and repeated slippage on deficit-reduction plans.