Insee, France's National Institute of Statistics and Economic Studies, has cut its forecast for France's economic growth in 2026 from 0.7% to 0.4%, marking the lowest growth since 2012, excluding the pandemic years. This downgrade, labeled an "orange alert" by Insee, highlights that France is the only major European economy expected to see slower economic activity in 2026, with growth projected to be three times lower than that of the eurozone or the United Kingdom. The report underscores growing concerns about the resilience of the French economy amid various challenges. A major factor behind the revised forecast is the impact of severe heatwaves during the summer of 2026, which are expected to cost 0.1 percentage points of annual growth. The agricultural sector has been particularly hard hit, with corn yields down 19% compared to 2025, the lowest since 2003. Sunflower production is also at its lowest since at least 1980. Overall, cereal production has dropped by 12%, and potato production has fallen by 22%, partly due to reduced cultivated areas. These declines have been attributed to extreme temperatures and water shortages. The construction sector has also suffered, with a 0.6% decline in added value during the second quarter of 2026. This downturn is linked to a sharp drop in public works activity, which contributed to a 1.7% decline in public investment for the year. Such declines are typical in the months following municipal elections, when public spending often decreases. Beyond the heatwaves, the closure of the Strait of Hormuz, a critical shipping route for about 20% of the world's oil and liquefied natural gas, has also affected economic growth. Inflation is expected to rise from 2.4% in August to 2.9% by year-end, driven by higher hydrocarbon prices from the Middle East conflict and rising food prices due to heatwave impacts. This inflationary pressure is expected to keep real wages stagnant and below 2021 levels, with household purchasing power declining by 0.4%, similar to the decrease in 2025, but now influenced by both inflation and employment losses. Corporate and household investment are also expected to decline in 2026, with corporate investment turning negative (-0.3%) due to weak demand and rising costs. Household investment is projected to fall by 1.3%. Meanwhile, the labor market has been deteriorating, with the unemployment rate expected to rise from 8.3% to 8.6% by year-end, making France the only major European economy with rising unemployment. Approximately 52,000 salaried jobs are expected to be lost, though non-salaried employment will grow, keeping overall employment nearly stable. Despite these challenges, Insee notes that foreign trade, especially in aerospace and naval industries, remains a key support for the French economy. However, the government's growth forecast of 0.7% for 2026 is likely to be revised downward, complicating efforts to maintain a public deficit around 5% of GDP.