France’s economy contracted in the third quarter while lawmakers debated a deficit-cutting 2027 budget, as provisional inflation accelerated to its highest annual rate since January 2024.
Gross domestic product fell 0.1% from July through September, France’s National Institute of Statistics and Economic Studies (Insee) said in its first estimate Friday. Output had declined 0.2% in the first quarter and was flat in the second. In the latest quarter, household consumption rose 0.4%, investment fell 0.6%, and foreign trade subtracted 0.6 percentage points from growth.
Insee’s provisional estimate showed consumer prices rose 3.4% from a year earlier in October, compared with a 3.1% annual increase in September. The agency is scheduled to publish final October inflation data Nov. 13 and detailed third-quarter GDP results Nov. 27.
Finance Minister Roland Lescure told France Info radio, “For three quarters now, there has been no growth.” He said France was not facing a crisis, but cautioned that continued stagnation without an economic reversal could have serious consequences.
The government’s proposed 2027 budget aims to bring the deficit to 5.0% of GDP, down from its 5.4% projection for 2026. It forecasts debt-interest costs of €91.2 billion next year, up from €79.2 billion in 2026. The National Assembly began examining the bill Oct. 13, and its provisions remain subject to change. EconoTimes previously tracked French borrowing costs as the budget debate approached.
France 24 reported analysts said the contraction made the government's 0.5% growth forecast for 2026 harder to reach. Insee and the Bank of France had projected 0.4% growth. France 24 also reported that the Yellow Vest movement and student unions called for protests Saturday, Oct. 31, amid public anger over living costs and inequality. The outlet said demonstrations on Oct. 17 escalated into serious rioting. Insee’s next scheduled releases are the final October inflation estimate on Nov. 13 and detailed third-quarter GDP data on Nov. 27.
