“The French economy is at a standstill”: GDP falls in the third quarter, France is close to recession

Still no rebound for French growth. After a decline of 0.2% in the first quarter and zero growth in the second, GDP again decreased by 0.1% between July and September according to INSEE. While it is on the verge of recession, characterized by two quarters in a row of decline, the French economy is struggling. An unpleasant surprise for the statistical institute as for the Bank of France, which expected a slight increase in activity, of 0.1%.

Household consumption, however, held up well. It even accelerated to 0.4% in the third quarter. But this support is not enough to compensate for the weakness of the other drivers of the economy: investment is falling sharply again (-0.6%), penalized in particular by construction. Foreign trade reduced growth by 0.6 points, with exports falling by 1.7%, while imports remained almost stable.

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“Without the draft budget for 2027, we will go into the wall,” warns Lescure

For the whole of 2026, the outlook is darkening. The growth gain stands at only 0.2%. While INSEE predicted 0.4% growth over the whole year, French GDP would now need to rebound by 0.5% over the last quarter for this forecast to come true. A rebound that seems difficult to achieve.

Bad news for the executive, which was counting on growth of 0.5% this year, then 1% in 2027. The weakness of activity risks weighing on tax revenues and complicates the achievement of the public deficit objective set at 5.4% of GDP for 2026. “In 2026, the French economy is at a standstill,” noted the Minister of the Economy, Roland Lescure, on franceinfo. While the draft budget for 2027 is being examined in Parliament, the boss of Bercy warns: “Today, if we do not have the budgetary adjustment that we put in the budget, we will go to the wall. » Voices within the central bloc, such as the President of the National Assembly Yaël Braun-Pivet, are now calling for the rapid use of 49.3 to have finance bills adopted.

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“Compared to its neighbors, France looks pale,” INSEE already warned when presenting its economic report in September. If it ultimately reaches 0.4% growth over the year, France would still do three times worse than its neighbors in the euro zone or the United Kingdom. “France would be the only large advanced economy where activity would slow down significantly in 2026,” Clément Bortoli, head of the economic synthesis division of INSEE, warned in September.

Machine-translated from French