France – An economy at a dead end

France is facing a new vote of no confidence against its government.

Dr. Vincent Stamer

Commerzbank Economic Research

02/05/2025

Regardless of the outcome, the country is facing an economic and fiscal deadlock. This is because economic growth has recently been largely driven by rising public spending, but the increasing interest payments on its debt force the government to implement significant savings in the coming years. Unemployment could rise in the coming months and the long-term outlook for France's economy is also rather bleak.

Confidence in the French economy is waning

Since the parliamentary elections in July 2024, French politics has been paralyzed. No political camp has an absolute majority in parliament, the constitution rules out snap elections for a year and lasting coalitions are not being formed.

Partly due to this political uncertainty, the mood among companies and investors in the EU's second-largest economy has fallen to an alarmingly low level. For example, the business climate of the French statistics authority Insee, a highly regarded economic indicator, has fallen continuously since its peak in summer 2021 and is now well below the average of the last seven years. This is worrying because entrepreneurs and investors are not only assessing the current situation, but are also forming expectations for the future and the outlook for the French economy is clearly very bleak.

For full text see attached PDF-Version.

Download

France – An economy at a dead end (pdf, 94 KB)

France – An economy at a dead end

Download

Further publications

China – Is the 5% growth target achievable?

German debt illusions

Germany – Hurdles to clear before the debt spigot can be turned open