France’s economy contracted in Q3 2026 as lawmakers consider a 2027 budget targeting a 5% deficit, while the government forecasts growth of 1% next year, up from 0.5% in 2026.
Real gross domestic product fell 0.1% from the previous quarter, according to the first estimate published Oct. 30 by France’s National Institute of Statistics and Economic Studies (INSEE). GDP declined 0.2% in Q1 and was unchanged in Q2.
Household consumption rose 0.4% in Q3, but investment fell 0.6% and exports dropped 1.7%. Net foreign trade reduced GDP growth by 0.6 percentage points. Manufacturing output declined 1.4%.
The draft finance bill was filed with the National Assembly on Oct. 1 and remains in the legislative process. It sets a 2027 public-deficit target of 5% of GDP, compared with the government’s 5.4% projection for 2026.
The government describes its plan as a €54 billion consolidation effort, including €43 billion in new measures and €11 billion already under way. It says 60% of the adjustment would come from spending measures. The government also projects that interest costs will rise from €79.2 billion in 2026 to €91.2 billion in 2027.
At the budget presentation, Economy and Finance Minister Roland Lescure said securing deficit-reduction goals was an “essential element” of the government’s credibility.
INSEE’s provisional estimate put October consumer inflation at 3.4% year over year, up from 3.1% in September. Final October figures are scheduled for Nov. 13. Agence France Trésor (AFT) listed its TEC 10 index at 4.93% on Oct. 30 and 5.13% on Oct. 22.
Euronext’s tally showed the CAC 40 fell 1.11% on Oct. 19, when investors were weighing budget concerns and unrest, as EconoTimes reported in its coverage of the French market decline.
INSEE is scheduled to publish detailed Q3 national accounts on Nov. 27.
