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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
“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.<\/p>\n
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.<\/p>\n
The unemployment rate is expected to hover close to its current level of 7.5%.<\/p>\n
(Reporting by Leigh Thomas; Editing by Emelia Sithole-Matarise)<\/p>\n","protected":false},"excerpt":{"rendered":"PARIS (Reuters) -France’s political instability could hold back growth in the euro zone’s second-biggest economy by pushing consumers…\n","protected":false},"author":2,"featured_media":426922,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5309],"tags":[68340,2000,299,36,133752],"class_list":{"0":"post-426921","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-france","8":"tag-bank-of-france","9":"tag-eu","10":"tag-europe","11":"tag-france","12":"tag-political-instability"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115209767855550407","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/426921","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=426921"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/426921\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/426922"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=426921"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=426921"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=426921"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}