The French economy stagnated in the second quarter of the year, with zero growth, according to the official statistical institute, Insee, which on Friday revised down the 0.2% estimate it had made for the period. It also corrected 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% decline previously forecast. This worsening of the situation is partly due to the effects of heat waves on agricultural production, according to the official body.
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The downward revision of growth is “the first concrete impact of the horrible summer” that France has experienced, said 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 eurozone narrowly avoids a technical recession, which occurs with two consecutive quarters of GDP decline. The statistical institute justified the revision due to “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 down growth for the first and second quarters, which will also affect 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 had already anticipated that successive heat waves and devastating fires that have ravaged the territory would have an economic impact.
On Friday, other indicators were also published that do not bring optimism. Inflation rose three tenths, to 2.4%, in July. It is more contained than in other neighboring 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.
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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 growth of 0.7%. But reaching that figure now seems very complicated, after the decline in the first quarter and zero growth in the second.
Prime Minister Sébastien Lecornu is finalizing the budget project for next year these weeks, which he was initially going to present at a cabinet meeting at the end of September. The accounts are expected to come with cuts to meet the goal of reducing the deficit. This stood at 5.1% of GDP in 2025, well above the 3% limit set by Brussels. Non-compliance with European fiscal rules may lead to corrective measures imposed by the Commission.
But Lescure already warned that the goal of lowering it to 3% in the current situation “will be difficult” and said the cost of the heat waves, estimated at about 15 billion, will be integrated into future accounts. This situation is a “wake-up call for those who had not yet awakened,” 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 in April 2027, the complicated economic situation in the country was precisely the topic of the first electoral debate, organized this Thursday by the employers’ association and in which eight of the declared candidates participated.