The political uncertainty that has shaken France since the dissolution of the National Assembly in June 2024 has weighed on growth. After a third consecutive quarter of growth, this time of 0.4%, mainly due to an Olympic Games effect, GDP fell by 0.1% in the fourth quarter.
This slowdown is amplified by a budgetary crisis: the public deficit has worsened to reach almost €175 billion, or almost 6 points of GDP. In 2025, efforts are expected to be made in order to put France back on a deficit reduction trajectory. The budget project drawn up by the Barnier government planned to reduce this deficit to 5 points of GDP in 2025, but the vote of no confidence of this government made these forecasts obsolete. Finally, the finance bill for 2025 of the new Bayrou government, adopted in early February, announces a deficit of 5.4 GDP points.
This projection is based on a growth forecast of +0.9% in 2025, according to the latest revision of the Finance Bill of January 2025, which corresponds to a slowdown compared to the +1.1% recorded in 2024. A figure that seems optimistic: in a report on the situation of public finances, the Court of Accounts recalls that the consensus of economists has for its part been revised and now forecasts +0.7%. Indeed, the budgetary efforts necessary to reduce the public deficit will weigh on activity in the short term. On the other hand, economic actors are faced with a lack of visibility that has reached unprecedented levels. Geopolitical tensions and the virulent trade war relaunched by the Trump administration will weigh on the economic outlook. Furthermore, France is also suffering from the difficulties of its main European partner, Germany.
INSEE’s economic investigations reflect a certain pessimism. Despite a 0.5% increase over one month, the business climate remains well below its long-term average. Opinion balances on future demand and order books are deteriorating in most sectors, which reinforces the scenario of weak growth in the first half of 2025.
Road transport prices in France also reflect the weakness of activity, with a fairly severe decline in January. They fell by 1.6% month-on-month, confirming the fears of business leaders who see volumes falling and meager order books.
Source: Upply Freight Index – Route France
At the same time, commercial diesel continued to increase, recording a 4.2% month-on-month increase. This is the fourth consecutive month of rises, bringing the increase to almost 9% over the period (...)