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France Cuts 2026 Growth Forecast to 0.7% and Orders New €3 Billion Austerity Push

The move signals a tighter fiscal trajectory as the government warns the 5% deficit target is now hard to reach and prepares further spending reviews.

Le point d'indice des fonctionnaires est toujours gelé par le gouvernement.
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Roland Lescure, ministre de l'Economie, à sa sortie de la réunion du Conseil des ministres, à l'Elysée à Paris, le 1er juillet 2026.

Overview

  • The government told a comité d'alerte on Tuesday that it has lowered its 2026 GDP growth forecast from 0.9% to 0.7% and described the goal of holding the public deficit at 5% of GDP as difficult to reach.
  • Ministers announced €3 billion of fresh savings for the State and social security on July 7, raising total announced cuts to about €9 billion and to €11 billion if a €2 billion risk for local authorities is counted.
  • Bercy reported weaker revenues that helped trigger the review, including roughly €80 million less in fuel-tax receipts over the first half of 2026 and about €1.4 billion already spent in targeted support tied to the Middle East shock.
  • Officials gave no detailed measures for the new cuts and face political obstacles as the government meets public-sector unions on wages and asks local authorities to curb spending voluntarily.
  • The shift comes against a backdrop of very high public debt—about 117.5% of GDP at end-March—and an EU excessive-deficit procedure that limit France’s fiscal room and raise the risk of further spending freezes or targeted health and green-program reductions.