(July 7): The French government is lowering its growth forecast for the year to 0.7% after a delayed budget and the Middle East conflict held back output, Finance Minister Roland Lescure told Le Parisien newspaper.
“This revision takes account of a less favourable than expected start to the year,” he said, adding that inflation and consumption data are “more encouraging".
Lescure warned last week that there were downside risks to the administration’s expectations for economic expansion, with its budget plans based on a 0.9% increase in gross domestic product in 2026. The new forecast is in line with statistics agency Insee, while the Bank of France sees weaker growth of 0.5%.
In addition to the impact of the Iran war, the minister also blamed a delay in the adoption of a budget for this year due to a deeply divided parliament. This forced the government temporarily to use a special law to roll over vital spending and taxation.
Data last week showed that French inflation slowed for the first time in June since the Iran war broke out as energy costs fell. Separate figures from Insee also indicated that consumer spending, the key driver of France’s economy, rose more than expected in May.
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