The data published bySee (the French Istat) outline an ambivalent economic picture: on the one hand, a GDP growth of 0.4% in the third quarter of 2024, on the other an increase in public debt and the risk of a political crisis linked to the approval of the budget law. The uncertainty has provoked the reaction of the markets which now price French debt with less reliable values than Greece.
Driven by the Olympic Games
The economic recovery was favored by the impact of Paris Olympic and Paralympic Gameswhich gave impetus to household consumption. Expenses for services, in particular for the purchase of tickets for sporting events, grew by 0.9% compared to the previous quarter. This dynamic contributed to a general increase in household consumption of +0.6%, an improvement compared to the stability recorded in the previous months.
THEnflation
At the same time, the country is facing moderate inflation: consumer prices grew by 1.3% in November compared to the same month the previous year, marking a slight increase compared to 1.2% in October. However, on a monthly basis, there was a reduction of 0.1%, a figure that theSee interpreted as “quasi-stability”. This picture reflects a fragile balance between inflationary dynamics and growing consumption.
Government in the balance
On the political front, the situation is extremely complex. The prime minister Michel Barnier announced that the 2025 budget law will not include increases in electricity taxes, guaranteeing a 14% reduction in the price for consumers, well above the 9% initially expected. This concession aims to avoid a motion of censure threatened by the National Rally (RN), calling for further measures, including cuts to health aid for foreigners and a crackdown on migration. The tension is exacerbated by the possibility that the RN votes with the left to block the government on the budget law. This political instability is part of a broader framework of conflict between the government and the opposition, also fueled by persistent dissatisfaction with the pension reform.
Markets in Alarm
The political difficulties have had repercussions on the financial markets: the cost of French public debt has exceeded that of Greece for the first time. Yields on 10-year French government bonds (OAT) reached 3.02%, versus 3.01% for Greek bonds, reflecting a change in perception among investors. Although the Minister of Finance, Antoine Armandhas downplayed the comparison with Greece, defining France as “economically and demographically stronger”, the signs of mistrust are evident. Political instability and a deficit exceeding 6% of GDP, well above the EU limit of 3%, increase pressure on the government.
Uncertain future
France therefore finds itself at a crossroads: on the one hand, economic data show a recovery driven by consumption and extraordinary events such as the Olympic Games; on the other, political tensions and market uncertainty risk undermining the progress made. With the government Barnier on the razor’s edge and the country relegated in the ranking of the most reliable countries in the Eurozone, the next few weeks will be decisive in understanding whether France will be able to overcome this critical phase or whether it will slip into a deeper crisis.
