Finance
French Central Bank Sees Growth Outlook Clouded by Politics
Published by Global Banking & Finance Review®
Posted on September 15, 2025
2 min readLast updated: January 21, 2026
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France's economic growth is hindered by political instability, with the central bank forecasting slower growth and low inflation through 2027.
French central bank sees growth outlook clouded by politics
Impact of Political Instability on Economic Growth
PARIS (Reuters) -France's political instability could hold back growth in the euro zone's second-biggest economy by pushing consumers and businesses into retrenchment mode, the central bank said on Monday in a quarterly outlook.
This year the economy is on course to grow slightly better than expected a few months ago, but only because companies built up inventories in the first half and exports are expected to pick up in the third quarter.
The Bank of France forecast the economy would therefore grow 0.7% this year, raising its estimate from 0.6% in June. The INSEE statistics agency forecast 0.8% last week.
Current Economic Forecast
But after this year, the economy would regain momentum more slowly than expected in June as the re-emergence of political turmoil in recent weeks makes the outlook for spending cuts and tax increases highly uncertain.
Future Growth Projections
The economy was now seen growing 0.9% in 2026 and 1.1% in 2027, the central bank said, trimming its forecasts from 1% and 1.2% respectively, due not only to political uncertainty but also less favourable international conditions, including a stronger euro and higher oil prices.
"The risks surrounding our growth forecast are tilted to the downside after 2025. Uncertainty about fiscal policy in 2026 could reinforce wait-and-see behaviour among businesses and households," the Bank of France said.
Inflation and Unemployment Trends
French inflation is expected to remain below 2% through 2027, among the lowest in the euro zone. It is seen averaging only 1% this year, before edging up to 1.3% in 2026 and 1.8% in 2027.
The unemployment rate is expected to hover close to its current level of 7.5%.
(Reporting by Leigh Thomas; Editing by Emelia Sithole-Matarise)
Key Takeaways
- •French central bank warns of political instability affecting growth.
- •Economy expected to grow 0.7% in 2023, slightly up from previous forecasts.
- •Growth projections for 2026 and 2027 have been trimmed due to uncertainties.
- •Inflation expected to remain below 2% through 2027.
- •Unemployment rate projected to stay around 7.5%.
Frequently Asked Questions about French central bank sees growth outlook clouded by politics
1What is the current growth forecast for France's economy?
The Bank of France forecasts the economy will grow 0.7% this year, an increase from its previous estimate of 0.6%.
2How does political instability affect economic growth?
Political instability could push consumers and businesses into retrenchment mode, holding back growth in the economy.
3What are the inflation expectations for France through 2027?
French inflation is expected to remain below 2% through 2027, averaging only 1% this year and edging up to 1.3% in 2026.
4What is the unemployment rate forecast for France?
The unemployment rate is expected to hover close to its current level of 7.5%.
5What are the growth projections for France's economy in the coming years?
The economy is projected to grow 0.9% in 2026 and 1.1% in 2027, which are lower than previous forecasts due to political uncertainty.
