The French economy stagnated in the second quarter of the year, with zero growth, as reported this Friday by the official statistical institute, Insee, which revised downwards the estimate of 0.2% it had made for the period. It also corrects the data for the first three months of the year, when the Gross Domestic Product (GDP) contracted by 0.2%, compared to the 0.1% drop expected until now. This worsening of the situation is produced in part by the effects of heat waves on agricultural production, according to the official body.
The downward revision of growth is “the first concrete impact of the horrible summer” that France has experienced, declared the Minister of Economy, Roland Lescure, during a speech at a public event. “It is an absolutely terrifying, enormous impact,” added the minister.
The second largest economy in the euro zone narrowly avoids technical recession, which occurs with two consecutive quarters of GDP decline. The statistical institute has justified the revision by “the even more deteriorated situation of agricultural production compared to the information available at the end of July”, when it made the first estimate. "Harvests will be extremely difficult in several sectors and regions. By incorporating this information, Insee has revised downwards the growth of the first and second quarters, which will also have an impact on the third," Lescure anticipated.
The current summer has been extremely hot in France and many regions of the country have suffered historic droughts. The Government already anticipated that the successive heat waves and devastating fires that have devastated the territory would have an economic impact.
This Friday, in addition, other indicators have been published that do not provide optimism either. Inflation grew three tenths, to 2.4%, in July. It is more contained than in other surrounding countries, but it grows while the economy remains stagnant, which is technically known as stagflation. The only good news from the second quarter is apparently the recovery of household consumption, which grew by 0.3%, after having fallen by 0.3% in the previous three months.
The revision of the figures compromises the current growth forecast of the French Government for the whole of 2026. The Executive initially expected a GDP evolution of 0.7%. But reaching that figure now seems very complicated, after the decline in the first quarter and the zero growth in the second.
The Prime Minister, Sébastien Lecornu, is finalizing next year's Budget project these weeks, which he was initially going to present at a meeting of his cabinet at the end of September. The accounts are expected to come with cuts to achieve the goal of reducing the deficit. This stood at 5.1% of GDP in 2025, well above the 3% limit set by Brussels. Failure to comply with European tax rules may lead to the imposition of corrective measures by the Commission.
But Lescure already warned that the objective of lowering it to 3% in the current situation "will be difficult" and said the cost of the heat waves, estimated at around 15,000 million, will be integrated into future accounts. This situation is a “wake-up call for those who had not yet woken up,” said the Minister of Economy, who considers it necessary to “continue fighting against climate change and adapt to what is happening.”
Eight months before the presidential elections of April 2027, the complicated economic situation in the country was precisely the topic of the first electoral debate, organized this Thursday by the business association and in which eight of the already declared candidates participated.
