Growth: GDP up very slightly by 0.1% in the first quarter

French economic activity grew by 0.1% in the first quarter, INSEE announced on Wednesday, April 29. This moderate increase in gross domestic product (GDP) between January and March corresponds to the forecast of the French National Institute of Statistics, and follows the 0.1% contraction observed in the fourth quarter of 2024 due to the impact of the Paris Olympic Games.

"The good news behind this figure is that despite the lack of a budget - since we waited until the end of February to have a budget and that weighed heavily on growth - growth is positive," reacted the Minister of the Economy, Eric Lombard, on Sud Radio this Wednesday: "What is important at the start of the year is what we call the growth carryover. That is to say that if nothing more happened, growth over the whole of 2025 would be 0.4%. This figure is important, it means that we are on track to reach our objective of 0.7% ." The Minister of the Economy, however, warned that it would "be a fight" in which the government would "support businesses."

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This French growth release comes ahead of those in Germany, Italy, and the eurozone, while Spain saw its GDP increase by 0.6% in the first quarter. It comes amid a continuing political volatility in France, with François Bayrou's minority government regularly threatened with censure.

In the first quarter, growth in the eurozone's second-largest economy suffered from sluggish household consumption, which remained stable despite a sharp decline in inflation, after rising 0.2% in the previous three months. Investments moved into negative territory (-0.2% after -0.1%) – this affected both business, household, and government investments, according to this initial estimate from INSEE.

The contribution of foreign trade was also negative (-0.4 points) due to a sharp decrease in exports (-0.7%) while imports increased by 0.4%. On the other hand, changes in inventories contributed positively to the change in GDP by 0.5 points.

The fall of the Barnier government in December led to a delay of several weeks in the adoption of the 2025 budget – finally promulgated in mid-February – and a temporary freeze on public spending at the previous year's level. Another penalizing factor was the €50 billion cut in spending and increase in levies planned in the budget to clean up severely degraded public finances. However, according to INSEE, public spending had until then helped mitigate the weakness in investment. A further €40 billion effort is expected in 2026 .

According to Eurostat, France has the worst public deficit in the eurozone for 2024, at 5.8%. The government intends to reduce it to 5.4% and then below the European ceiling of 3% by 2029. Its debt (113% of GDP) is the third highest after Greece and Italy.

To meet its 2025 deficit target, the government also approved €3.1 billion in budget cuts on Saturday. This "new cut" is expected to have a recessionary effect, according to Eric Coquerel (LFI), chairman of the National Assembly's Finance Committee . The MP is calling for the government to table a draft amending finance bill in "spring or early summer" so that Parliament can "discuss new revenues."

In this context, after 1.1% in 2024 , growth is expected to slow sharply in 2025, to 0.7% by both the government and the Bank of France, with the risk of seeing unemployment rise slightly. The governor of the Central Bank, François Villeroy de Galhau, did not rule out "a slowing trend" on Monday when updating the institution's forecasts in June, while also counting on "certain elements that could have a positive impact, such as the recovery in Germany."

The INSEE has not yet provided an annual forecast, while the IMF is predicting growth of 0.6% for 2025.