France cuts economic growth forecast and will miss deficit target
In France, the government cut its economic growth forecast for 2026 from 0.7% to 0.5% and acknowledged that it would not be able to reduce the budget deficit to the planned 5% of GDP. Economy and Finance Minister Roland Lescure said this.
Revision of the macroeconomic forecast
As Asharq Al-Awsat reports, the government maintained its forecast for French economic growth in 2027 at 1%. Slower growth in 2026 complicates the adoption of the 2027 budget in a deeply divided parliament, where parties have strengthened their positions ahead of the two-round presidential election in April—May.
According to Lescure, the budget was drafted on the basis of a deficit equal to 5% of the economy, but this figure is no longer achievable. The minister did not name a new deficit target.
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Pressure on public finances
Lescure linked the deterioration of the economic situation to the consequences of the war in the Middle East, as well as summer heatwaves and drought that affected agricultural production. According to him, economic uncertainty is extremely high, while budget constraints leave no room for further spending cuts.
Higher borrowing rates for France became an additional factor. In recent weeks, investors have considered the country one of the more vulnerable links in the global bond sell-off because of weak public finances and repeated deviations from deficit-reduction plans. The minister stressed that France has no problems issuing debt, but the cost of such borrowing has increased.
