France's economy unexpectedly contracted in the third quarter, with gross domestic product falling by 0.1% between July and September. This follows a stagnant second quarter and a 0.2% decline in the first, meaning the country has recorded no growth since the start of the year.
Further complicating the economic landscape, inflation has risen more than anticipated and is nearing a three-year high. Simultaneously, investment continues to decline and exports have dropped.
Finance Minister Roland Lescure has warned that the economy could be headed for a wall or face a crash if parliament fails to approve a deficit-reducing budget containing fiscal consolidation measures soon. The government is urging political forces to adopt the 2027 budget as the country's ability to reassure markets remains in doubt.
Concerns over the government's high debt load and deficits have deepened amid enduring political paralysis, sending government bond yields soaring in recent weeks. These pressures are exacerbated by budgetary uncertainty and violent nationwide protests, which are making it more difficult for the government to cut spending.