French economy shrinks as inflation rises, minister warns of crisis risk

Summarised from 2 outlets · Updated 30 Oct, 10:33 · Archive

France's economy contracted by 0.1 per cent in the third quarter as inflation accelerated to 3.4 per cent.

France's economy contracted by 0.1 per cent in the three months to September, according to national statistics agency Insee. The decline marked the third consecutive quarter without growth, following a 0.2 per cent contraction in the first quarter and no growth in the second. Inflation accelerated to 3.4 per cent on an annualised basis in October, up from 3.1 per cent in September and the fastest rate since January 2024.

Finance Minister Roland Lescure attributed the negative growth to extreme heat and high energy prices over the summer. He said the figures give urgency to parliament's approval of the government's 2027 budget, which proposes €43 billion in savings to reduce the deficit to 5 per cent of GDP. 'The French economy is at a standstill,' Lescure told Franceinfo radio. 'If we don't have the budget adjustment we put in the budget, we will hit the wall.'

France's fragmented parliament failed to pass budgets before the new year in both 2024 and 2025. The government may need to use a constitutional mechanism to bypass a parliamentary vote, but this could expose the minority government to motions of no confidence ahead of presidential elections in spring 2027. Lescure said adopting a budget was essential to 'reassure markets' and relaunch growth.

French economy shrinks as inflation rises, minister warns of crisis risk — Image: France 24

Comments (0)

How it is being reported

Economy minister warns France could ‘hit the wall’ as new figures show GDP contraction“The French economy is at a standstill,” Finance and Economy Minister Roland Lescure said.Politico Europe · 30 Oct, 10:19
French economy 'headed for a wall' as GDP shrinks, finance minister warnsFrance's economy unexpectedly shrank in the third quarter while inflation rose more than anticipated, piling pressure on the government ahead of further nationwide protests this weekend that are making it more difficult to cut spending. Finance Minister Roland Lescure warned that the economy could be "headed for a wall" if parliament fails to approve a deficit-reducing budget soon.France 24 · 30 Oct, 08:01

In this story: France · Roland Lescure · INSEE · European Union

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem · Corrections log