French economy slows down - Growth in the last quarter of 2025 was 0.2%
France's economy grew modestly in the fourth quarter of 2025, slowing after a strong recovery over the summer, as slightly weaker domestic demand and a drop in business inventories weighed on activity, preliminary data from statistics office INSEE showed.
Quarterly growth slowed to 0.2% from 0.5% in the third quarter, when the eurozone's second-largest economy surprised by growth. In 2025, the economy expanded by 0.9%, exceeding the 0.7% forecast used in the government's budget planning. The stronger-than-expected performance raises the possibility that the fiscal deficit will be just below the 5.4% of gross domestic product currently forecast.
The economy fared better than many experts had expected, despite months of political turmoil in a deeply divided parliament that affected the mentality among households and companies.
Some political uncertainty is expected to ease. Meanwhile, Prime Minister Sebastien Lecornu used a special constitutional power on Friday to approve the 2026 budget bill without a vote in the deeply divided Lower House of parliament.
Lecornu had already used Article 49.3 of the Constitution on both the revenue and expenditure sides to pass it in the Lower House, where it had stalled after three months of discussions. Opposition parties are expected to file no-confidence motions against his government.
Prospects for a strong recovery remain limited, economists say. The budget "remains unfavourable for businesses" and higher taxes could dampen investment and job creation, they say.
Economists describe the overall outlook as "modestly positive," citing early signs of improving business confidence, although a strong euro could hamper exports.
In the fourth quarter, household spending and investment boosted overall domestic demand, which contributed 0.3 percentage points to the growth rate.
With exports rising and imports falling, foreign trade added 0.9% to the growth rate, while a decline in corporate inventories subtracted 1%.
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