With consumer spending failing to rebound, savings rates remaining at record highs, investments struggling to recover and foreign trade slipping back into deficit, all the engines of the French economy have come to a halt. According to the new outlook from INSEE, France’s national statistics agency, published on Wednesday, June 18, GDP growth in 2025 is not expected to exceed 0.6%.
This is likely a disappointment for the government, which had revised its growth forecast down to 0.7% in April, a 0.2-point drop from the 0.9% it still hoped for in January. Despite fresh uncertainty triggered by the war between Israel and Iran, Amélie de Montchalin, the minister for public accounts, said on Tuesday: “Our growth forecast remains achievable.”
INSEE’s outlook is more pessimistic than the government’s. Growth was barely positive in the first quarter (0.1%) and was only expected to reach 0.2% in each of the next three quarters. The French economy has not benefited from the slight improvement in the eurozone business climate, partly linked to lower interest rates. “Fiscal consolidation is weighing on activity,” stressed Dorian Roucher, head of the economic outlook department at INSEE. Government consumption, for instance, fell in the first quarter of 2025 compared to 2024 (0.2% instead of 0.4%). The government, which must bring the public deficit down to 5.4% of gross domestic product in 2025 after 5.8% in 2024, is seeking to cut public spending by €40 billion.
‘Excess savings’ phenomenon
Another handicap: Unlike the United Kingdom, Germany or Italy, France has not benefited from the “commercial rush” – that is, companies’ rush to build up inventories ahead of the tariffs announced by US President Donald Trump in early April. This phenomenon led to a 1.7% jump in global trade in the first quarter. French foreign trade, after two strong years, slipped back into deficit. Despite the high-profile delivery of the cruise ship World-America by Chantiers de l’Atlantique to Swiss company MSC in March, exports fell by 1.8% in the first three months of the year. For 2025 as a whole, foreign trade is expected to reduce French GDP growth by 0.7 percentage points.
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