French growth forecast revised downward

The French economy is expected to grow more slowly than previously thought, with the OFCE forecasting 0.4% growth in 2026, which is 0.1 percentage points lower than the government's prediction. For 2027, the OFCE projects a PIB growth of 0.5%, which is significantly lower than the government's estimate.

Weak performance compared to neighbors

According to Mathieu Plane, deputy director of the Analysis and Forecasting department at the OFCE, the lower growth in 2026 reflects a "real underperformance" and a "beginning of falling behind" compared to neighboring countries. The French PIB declined by 0.2% in the first quarter of 2025 before stagnating in the second quarter, followed by small increases in the third and fourth quarters.

Causes of sluggish growth

The slow growth is attributed to several shocks, including energy sector issues since the start of the war in the Middle East, heatwaves affecting agriculture, and challenges in the construction sector. Global uncertainty, whether from national policy or geopolitical tensions, has reduced PIB by 0.3 percentage points this year. Without these shocks, the OFCE estimates that PIB would have grown by 1.4%.

Government policies and their impact

If the government's plan, which includes a structural effort of 38 billion euros, is implemented as is, it would reduce PIB growth by 0.4 percentage points. A special law, if it remained in force for an entire year, would have a less harmful effect on growth (+0.8% in 2027) but would worsen the public deficit by 6% of PIB. The OFCE expects the public deficit to remain at 5.4% next year, higher than the government's target of 5%.

Labor market outlook

The OFCE predicts continued deterioration in the labor market, with 200,000 net job losses in the private sector between the end of 2025 and the end of 2027. These job losses are primarily due to weak economic activity and productivity gains that reduce the need for labor. Self-employment may add 100,000 jobs but will not be enough to offset the growing active population or prevent the unemployment rate from rising to 8.8% by the end of 2027.