French consumers tighten belts as election and budget fights loom

French consumers are pulling back on spending as rising prices, costly energy and political uncertainty ahead of next year's presidential election weigh on household confidence.

The caution is visible in everyday life. At one Paris restaurant, a cash-strapped customer recently split an entrecôte steak with a companion, while others increasingly share starters, skip wine at lunch or order only a main course. "The purchasing power is really limited," said restaurant owner David Zenouda, adding that the only busy cafe terraces are those selling four-euro pints of beer.

The restraint matters well beyond individual businesses. Consumer spending accounts for half of France's gross domestic product and value-added tax is the government's single largest revenue source, so a pullback drags on growth and complicates efforts to close a budget gap that must pass a divided parliament — a task that has already brought down two governments.

Surveys point to widespread anxiety. A September poll by consumer credit firm Cofidis found 60% of French people believe inflation is accelerating, 58% are cutting non-essential spending and 54% are paying closer attention to prices. More than half expect their purchasing power to deteriorate further over the next year, up 10 percentage points from a year earlier.

"There's war in the Middle East, we had a severe heatwave and wildfires this summer, an election is approaching and unfortunately we are refinancing a very high level of public debt," said Mathieu Escarpit, Cofidis France's marketing director. "The backdrop is not very reassuring."

Economists and business leaders warn the caution risks holding back an economy struggling to gain momentum. Grocery chain Systeme U chief Dominique Schelcher said households were in entrenchment mode ahead of the election, while economist Mathieu Plane of the French Institute for Economics pointed to rising oil prices and weak wage growth eroding remaining spending power. Escarpit said consumers are considering skipping holidays or weekend car trips and cutting back on leisure, eating out, clothing and fuel.

Clothing retailers reported weak summer sales, with revenue down more than 5% from a year earlier even though the government-regulated season was extended by an extra week, according to industry group Fédération Nationale de l'Habillement.

France barely avoided recession earlier this year, posting flat growth in the second quarter after a 0.2% contraction in the previous three months and faring worse than Germany and Italy, INSEE data showed last month. A 0.3% rebound in consumer spending helped keep the economy out of recession, but households managed it only by dipping into savings, which remain well above pre-COVID levels. After adjusting for inflation, disposable income fell 0.5% in the second quarter while the savings rate slipped to 17.2% from 17.9%.

With no immediate relief in sight, purchasing power is shaping up as a central issue in the April 18/May 2 presidential election, much as it was in the 2024 legislative vote when the far-right National Rally won a record seat haul on a cost-of-living and anti-immigration platform. "People are already saying: 'I'm putting some money aside because I don't know what the new president's tax policies will be', and that's not good for consumer spending," Schelcher said on France Inter radio.

National Rally candidate Marine Le Pen, leading in the polls, wants to cut value-added tax on energy, while hard-left contender Jean-Luc Melenchon has called on companies to raise wages to avert a consumer-led recession. Centre-right candidates Gabriel Attal and Edouard Philippe both want to reduce the middle-class tax burden by lowering payroll welfare contributions, though economists warn France has few affordable options. "There is no longer really any scope for action on the purchasing power front as the state doesn't have the means to support households," Plane said.