Growth: Banque de France lowers its forecast to 0.6% in 2025

As the months go by, expectations for French economic activity fade. "Growth is slowing, but without a recession," describes Olivier Garnier, Director General of Statistics and Research at the Banque de France. For the third time in a row, the institution has revised its gross domestic product (GDP) growth forecasts downward in its economic report published this Wednesday, June 11. It now only expects a slight increase of 0.6% this year ( like the European Commission in May), whereas it was expecting 0.7% in its March projections (on which the Bayrou government had relied to revise its own assumptions), 0.9% in those of December and even 1.2% in those of September... For the following years also, it is less optimistic than previously, with growth at 1% in 2026 then at 1.2% in 2027. Enough to complicate the preparation of the budget for 2026 by the Bayrou government even more.

These new downgrades have much to do with Trump's trade policy and its untimely tariff increases and with the high level of uncertainty surrounding global economic activity . Even if France is relatively spared, this would cost it 0.4 points of GDP over three years. "The effect of uncertainty is greater than the direct effect of tariffs over three years," Olivier Garnier emphasizes. And yet, the assumptions taken into account and finalized on May 21 ( two days before Trump's threat of 50% tariffs ) are rather optimistic: they rely on no escalation with the President of the United States. This includes so-called "reciprocal" customs duties of 10% on European Union exports without retaliatory measures, as well as sectoral measures already in force, such as the 25% taxes on steel and automobiles.

In an alternative so-called "severe" scenario, with 20% tariffs on European products and retaliatory measures of the same magnitude on American products, the cost would be higher for French activity, 0.3 points of GDP less this year and the same amount next year. This would reduce growth to a minuscule 0.3% this year and then to 0.7% next year. However, there would be no significant impact on inflation.

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In the "central" scenario, while exports are expected to slow sharply "due to the increase in US customs duties, the decline in demand from outside the eurozone, and the appreciation of the exchange rate," French domestic demand would more or less hold up by changing its composition. "The lower contribution of private demand would be offset by higher public demand," the economic report predicts.

Household consumption is still expected to remain "the main driver of growth" through 2027, although even less vigorous this year. It is expected to increase by 0.7% compared to 0.9% last year. The household savings rate is unlikely to return to its pre-pandemic lows anytime soon. After 18.2% of gross household disposable income in 2024, this rate would be 18.1% this year, 17.4% in 2026, and 16.8% in 2027. "This is an accounting effect," considers Olivier Garnier. "We must avoid interpreting changes in savings rates as reflecting household behavior."

As for inflation, it is expected to remain low . The harmonized index of consumer prices (which serves as a basis for international comparisons) is expected to be only 1% this year, due to the sharp decline in energy prices. According to the Banque de France, the rise in the unemployment rate should be contained, falling from 7.4% in 2024 to 7.6% of the active population this year, 7.7% next year and then 7.4% in 2027. This better outlook would be linked to a lesser recovery from past productivity losses.