France’s economy is expected to remain on a path of moderate growth over the coming years, but the outlook is shaped by several challenges, including higher energy prices, geopolitical uncertainty, rising unemployment and increasing public debt.

Following economic growth of around 0.8% in 2025, France’s real GDP is projected to expand at a similar pace in 2026. Growth is expected to be supported by strong external trade, particularly through the strength of the aerospace sector and increased demand from the defence industry. Net exports are forecast to contribute positively to economic activity, helping to offset weaker domestic demand.

However, household consumption is expected to remain under pressure. The impact of higher energy prices linked to the conflict in the Middle East is likely to reduce consumers’ purchasing power by affecting real disposable incomes. Although households are expected to gradually reduce their savings rate, it is expected to remain relatively high at around 17.6%, reflecting continued caution among consumers.

In 2027, economic activity is expected to improve slightly, with GDP growth forecast to reach around 1.1%. This recovery would be supported by declining energy prices, stronger household incomes and increased private investment. Defence-related orders and investment in information and communication technologies are expected to play an important role in supporting business activity.

Inflation remains one of the main factors influencing France’s economic outlook. After remaining relatively contained at the beginning of 2026, inflation increased sharply following a rise in energy prices connected to geopolitical tensions. Consumer price inflation is expected to average 2.4% in 2026 before easing to around 1.8% in 2027. While inflation is expected to decline gradually, food and energy prices remain important risks for households and businesses.

The labour market is also showing signs of weakness. Employment growth slowed in 2025, and the unemployment rate increased to 7.9% by the end of the year. This trend is expected to continue, with unemployment projected to rise to approximately 8.3% in 2026 and 8.7% in 2027. Although France’s labour force participation rate has reached a historically high level, partly due to the impact of the 2023 pension reform, companies are expected to remain cautious in hiring as economic growth remains limited.

France’s public finances represent another major challenge. The government deficit improved from 5.8% of GDP in 2024 to 5.1% in 2025, helped by higher revenues and spending control measures. However, the deficit is expected to remain around 5.1% in 2026 before increasing to 5.7% in 2027 if current policies remain unchanged.

Rising interest payments are adding pressure to public finances. As government debt levels increase and borrowing costs remain elevated, interest expenses are expected to continue rising. Public debt, which reached approximately 115.6% of GDP in 2025, is projected to rise above 120% of GDP by 2027. The increase is mainly driven by persistent primary deficits and higher debt-servicing costs.

Overall, France’s economic outlook reflects a balance between resilience and pressure. Strong export sectors, industrial investment and improving conditions in the medium term provide support for growth. At the same time, high public debt, inflation risks and a weaker labour market remain key challenges. The country’s ability to maintain growth while restoring fiscal stability will be central to its economic performance in the coming years.

References

European Commission . (2026, May 21). Economic forecast for France. Retrieved from European Commission : https://economy-finance.ec.europa.eu/economic-surveillance-eu-member-states/country-pages-including-country-reports/france/economic-forecast-france_en

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