• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Editor's Pick

French central bank trims growth outlook on political drama

by December 16, 2024
written by December 16, 2024

PARIS (Reuters) – France’s economy will grow more slowly than expected in the next two years as its home-grown political turmoil adds to the global volatility weighing on activity, the central bank forecast on Monday in its quarterly outlook.

After growth of 1.1% this year, the euro zone’s second biggest economy will expand 0.9% in 2025, the Bank of France estimated, trimming its forecast from 1.2% in September.

The central bank said government belt-tightening and political uncertainty would weigh on consumer spending and private sector investment.

A series of political crises this year has rattled consumers and businesses, making them cautious about the future and further clouding an outlook already darkened by potential U.S. tariff hikes.

President Emmanuel Macron named the fourth prime minister this year on Friday after opposition lawmakers voted out the previous government in a dispute over its 2025 budget bill, which had aimed to reduce the public deficit to 5% of output from 6.1% this year.

If the new government proposes less belt-tightening in a new budget bill, any boost to growth would still be offset by prolonged political uncertainty over the state of public finances, the Bank of France said.

“If our country remains in budget denial due to political friction, it would risk progressively slipping further behind economically and versus other European countries,” Bank of France Governor Francois Villeroy de Galhau told Le Figaro newspaper.

Growth was seen recovering to 1.3% in 2026 and 2027 as consumers benefit from wages growing faster than inflation. But that growth could take a hit if people kept putting their spare cash into savings in the face of all the uncertainty.

After average inflation this year of 2.4%, the Bank of France forecast it would remain below the European Central Bank’s 2% target for the next three years, with the rate easing to 1.6% in 2025 before accelerating to 1.7% in 2026 and 1.9% in 2027.

In the absence of more strict belt-tightening, the central bank said it expected France’s debt burden was set to keep rising to 117% of GDP by 2027.

Credit ratings agency Moody’s (NYSE:MCO) unexpectedly downgraded France’s rating on Friday, citing in particular the political fragmentation making meaningful improvement in the public finances more tricky.

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
FTX’s Chapter 11 Plan to Go into Effect on January 3rd, 2025
next post
US bond investors brace for ‘hawkish cut,’ spurn long-term bonds

You may also like

China central bank conducts 1.7 trln yuan of...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

ECB president fears loss of central bank independence

January 27, 2025

European tech shares tumble as China’s AI push...

January 27, 2025

Futures slip as investors eye China’s latest AI...

January 27, 2025

Markets may be repeating the mistake of 2019,...

January 27, 2025

How billionaire Caltagirone could influence Italy’s banking M&A...

January 27, 2025

How Italy’s MPS went from near collapse to...

January 27, 2025

Analysis-To weather Trump, emerging market investors look to...

January 27, 2025

Chinese AI startup DeepSeek overtakes ChatGPT on Apple...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks

      June 26, 2025
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

      June 26, 2025
    • Bumble shares jump 26% as dating company plans to axe 30% of workforce

      June 26, 2025
    • Small-business AI use is lagging, but one firm is channeling Sherlock Holmes and knocking out ‘grunt work’

      June 25, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (534)
    • Stock (6,426)

    Latest News

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

    Popular News

    • BofA’s client flows: Post-election inflows streak continues
    • AMD shares fall as Goldman Sachs turns more bearish

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy