The French economy is not moving much, and it is starting to show. Growth has stalled, business leaders aren’t optimistic, and people are holding tight to their wallets.

The economy grew just 0.1% in the first quarter of 2025. That was not thanks to rising demand, but rather stockpiling. Most forecasts now expect yearly growth to land between 0.4% and 0.6%. That is down from 1.2% last year, and it is not enough to spark new momentum.

The savings rate now sits at 18.2%, showing just how hesitant people are to part with their cash.

Stephanie / Unsplash / Even with inflation cooling, French households are not rushing to spend. Consumption is sluggish, and savings have reached their highest point in 45 years.

Business sentiment took a hit in June, dropping to 96. That is below the usual baseline of 100. Manufacturing is especially downbeat, with order books thinning out and inventories piling up. Factories are not betting big on the months ahead.

In the industrial sector, hopes for a strong comeback are low. Confidence in future production is weak. Supply may be steady, but demand is not matching it. Many businesses are playing defense instead of investing in growth.

Investment is on a Losing Streak

For seven straight quarters, business investment has declined. That is almost two years of hesitation. Companies are facing high interest rates, uncertain market signals, and tighter government spending. All of it has slowed their appetite for risk.

Lower inflation usually gives spending a lift, but not this time. Consumers are wary. Even as energy prices fall and overall inflation cools to just 0.8%, people are not confident enough to spend freely. Many still feel the pinch from past cost hikes.

Chris / Pexels / France hasn’t seen the trade surge that other European countries are enjoying. The aerospace and luxury sectors are feeling the strain of higher tariffs from the U.S.

Government cutbacks are taking a toll, too. France plans to trim €40 billion from its budget this year. Public consumption is slowing sharply. Less government money in the system means less cushion for the economy overall.

Unemployment is Climbing in France

Job growth is cooling off. Unemployment, which was 7.4% in 2024, is expected to rise to 7.9% in 2025. Without new jobs, it is even harder to get consumers to spend and businesses to expand.

Retailers and service providers are seeing only minor gains. The mood here is better than in manufacturing, but just slightly. Without stronger demand, growth across these sectors remains thin.

French exporters missed out on the last-minute rush to ship goods before trade rules shift. Unlike Germany and Italy, France didn’t benefit from that spike. This left them without a temporary lift that others got from global inventory adjustments.

Weakness in global demand, especially from key partner Germany, is making things worse. France depends on outside buyers, and when they hesitate, the pain shows up quickly at home. Exports fall, and so does confidence.

High borrowing costs are slowing everything down. Businesses don’t want to invest, and consumers avoid loans. Unless rates start falling, there is little room for a natural rebound from inside the economy.