French Economy Shows Resilience as Banque de France Raises Growth Forecasts for 2025 and 2026

French Economy Defies Uncertainty as Banque de France Adjusts Forecasts Upward

The Banque de France has announced that it will raise its growth forecasts for 2025 and 2026 — a move that signals renewed confidence in the country’s economic resilience. Governor François Villeroy de Galhau revealed that France’s economy is performing better than many expected, despite ongoing political uncertainty and fiscal challenges.

While precise figures will be released on December 19th, the updated outlook will surpass the previous estimates of 0.7% for 2025 and 0.9% for 2026. This adjustment reflects a growing sense of optimism following a period of economic slowdown and budgetary tension.

Growth Holding Steady Despite Political Tension

According to the Banque de France’s latest business survey, activity in both the industrial and service sectors continued to expand through the final quarter of 2025. The French economy grew by 0.5% in the third quarter, exceeding initial expectations and avoiding any sign of a recession.

“The French economy is proving more resilient than one might think in the face of political uncertainty,”
— François Villeroy de Galhau, Governor of the Banque de France

However, Villeroy de Galhau cautioned that while the outlook is positive, resilience alone is not enough. “Even if we reach 1% growth, that’s still not sufficient. It’s a sign of resilience, not acceleration,” he noted, underscoring the fragility of the recovery.

The Cost of Political and Global Uncertainty

Despite the encouraging numbers, the Banque de France estimates that domestic political instability could be cutting about 0.2 percentage points off France’s growth rate. When factoring in global tensions — from the ongoing war in Ukraine to trade protectionism by major economies — the total impact could approach 0.5 percentage points.

These headwinds highlight how dependent France’s growth remains on both domestic policy clarity and international stability. A closely contested parliamentary landscape and debates over social spending have only added to investor caution.

A Call for Fiscal Responsibility

Beyond growth figures, Villeroy de Galhau issued a clear warning about France’s widening budget deficit. “France cannot live beyond its means,” he said, pointing to the country’s persistent tendency to favour spending over revenue.

He explained that half of the increase in public spending over the past two decades has come from pension costs. The government’s recent decision to suspend pension reforms — a concession to the Socialist group to pass the latest social security budget — has reignited questions about long-term fiscal sustainability.

“Putting pension reform on hold doesn’t make our financing problem disappear. We need to sit down together and find lasting compromises,”
— François Villeroy de Galhau

What This Means for Businesses and Households

For entrepreneurs and consumers, this adjustment offers both reassurance and a reminder:

Short-term relief: The economy remains stable and avoids recession.
Medium-term caution: Structural reforms remain essential for sustainable growth.
Investment sentiment: A more predictable fiscal path could boost business confidence.

France’s continued resilience, backed by moderate growth and contained inflation, may help the European Central Bank sustain a steady monetary policy approach into 2026 — a positive sign for borrowing conditions.

Outlook: Fragile Stability Ahead

In essence, France’s story heading into 2026 is one of resilient yet delicate growth. The economy has weathered turbulence better than feared, but the underlying question remains: can France balance its books while maintaining social and political harmony?

Much will depend on whether the country can combine its economic durability with a credible path to deficit reduction and reform.