Full Breakdown
France Lowers Growth Forecast Amid Fiscal Strain
By Drooid · · How we work
Core Event
On September 11, Finance Minister Roland Lescure is slated to announce that the government is cutting its 2026 economic-growth forecast to 0.5 %, down from the previously projected 0.7 %. The same statement confirms that the 2027 budget deficit target of 5.0 % of GDP is now out of reach, and that the government will continue to present its revised budget bill to parliament before the month ends.
Background & Context
Lescure attributes the slowdown to a combination of “four different types of shocks”: heightened domestic political uncertainty ahead of the 2027 presidential election, surging energy prices, extreme summer weather that damaged agriculture, and a jump in borrowing costs on bond markets. He also cites the broader economic fallout from the war in the Middle East and persistent drought conditions as additional drag on growth.
Data & Statistics
- Revised 2026 growth forecast: 0.5 % (previously 0.7 %).
- Projected 2027 growth: 1.0 %.
- Deficit target: 5.0 % of economic output (no new target set).
- Debt-service cost this year: €65 billion, the single largest budget expense, €4.5 billion higher than initially planned.
- France’s 10-year risk premium over German bonds has widened to its highest level since 2012.
Official Statements & Responses
He warned that the widening risk premium makes borrowing more expensive, even though France still faces no difficulty issuing debt.
Verbatim Quotes
- “This year has been marked by extreme crises involving four different types of shocks,” — Roland Lescure, finance minister
- “The reality is that the budget was built on a 5% assumption. And the reality is that, today, 5% is no longer an option,” — Roland Lescure, finance minister
- “I think we are at the foothills of something more concerning for France,” — James Athey, fixed income manager at Marlborough in London
- “I think it is reasonable to say that economic uncertainty has never been greater than it is today,” — Roland Lescure, finance minister