The forecasts for the coming year are quite worrying: here is why the French should be worried.
The year 2025 begins with uncertainty. Although France does have a government, it remains fragile and its finance bill (PLF) for 2025 is not guaranteed to be adopted. However, the economic measures that the Prime Minister will propose for February are at the heart of the concerns of the French, according to an Ipsos survey published a few weeks ago. In this survey commissioned by the Economic, Social and Environmental Council (Cese), 34% of respondents are worried about purchasing power and 28% about the economic and financial situation of the country, an increase of five points compared to the last year.
Concerns about the French economy have not diminished at the start of the year. They may even increase, if we consider the new statistics on the subject. INSEE recently disclosed bleak economic indicators for the new year that has begun. Here are 6 that could undermine morale:
1/ The overall weight of taxes should increase this year, with a forecast of 43.6% of GDP in 2025, compared to 43.2% in 2023 and 42.8 in 2024. Added to this are public spending at a level very high, at 56.4% for the new year.
2/ France will be less attractive for investors, who scrutinize rates of return to calculate their gains. For example, the difference in yield rates (the “spread”) is ever greater between Paris and Berlin: 76.5 points in 2024, compared to 65.1 in 2022, which increases the risk premium. demanded by investors. In short: for an investor, it will be generally more interesting to act elsewhere in Europe than in France.
3/ Growth will be at half mast in 2025. Considering the uncertainty of the economic context, the Banque de France announced at the end of last year to lower its growth forecast to 0.9% – or 0.3 points less – GDP for 2025. INSEE is more pessimistic, pointing to the drop in investments which should more strongly penalize French GDP growth, which should not exceed 0.2% in the first and second quarter 2025 according to INSEE.
4/ Public debt will weigh heavily in 2025, after having already largely worked to our disadvantage in 2024. It reached 1,000 billion euros during the 4th quarter, compared to 947 billion euros in the second quarter of the same year . To finance this budget deficit, Agence France Trésor has already communicated the amount of sums borrowed on the markets by the State, i.e. 300 billion euros for the year 2025.
5/ Unemployment should increase. In addition to the lack of growth, the recovery of public accounts will require efforts from businesses and will have an impact on employment: unemployment could rise to 7.5% in mid-2025, or even reach 8% one year in the coming months. According to information from RMC, “nearly 150,000 jobs” risk being “destroyed” this year. We haven’t seen anything like this since 2012.