France's economy shrinks 0.1% in Q3 as exports decline

Paris — In the third quarter of 2026, France's economy contracted by 0.1%, according to new data from the national statistics agency Insee, raising concerns about the nation's approach to recession and intensifying the government's fight against a looming financial crisis driven by debt. Minister of Economy and Finance Roland Lescure attributed the negative growth to the scorching summer heat and surging energy costs, emphasizing the urgency of passing the proposed 2027 budget to curb the deficit to 5% of GDP the following year.

Lescure warned, "If we don’t have the budget adjustment we put in the budget, we will hit the wall."

However, France's divided parliament has previously failed to pass budgets in 2024 and 2025, and the upcoming spring 2027 presidential election might further hinder reaching an agreement. This could compel Prime Minister Sébastien Lecornu to enact the budget through a constitutional backdoor, circumventing a parliamentary vote, potentially placing the minority government at risk of a no-confidence motion.

Lescure stressed that adopting the budget for next year is crucial to "reassure markets" and spur economic growth in the final quarter of the year.

The French economy saw a slight contraction of 0.1% in the first quarter of 2026 and saw no growth in the following three months. This sluggish growth is likely to challenge the government's promise to reduce the deficit to 5.4% of GDP this year, as the target was predicated on an anticipated 0.5% increase in economic activity in 2026. Lescure lamented, "The French economy is at a standstill. It has to restart."