Growth at 0.7%, Deficit Off Track: IMF Sounds the Alarm for France

Growth Revised to 0.7% and Budget Path Deemed Insufficient

The IMF forecasts French real GDP growth to be limited to 0.7% in 2026, down from 0.9% in 2025. The institution attributes this slowdown to the effects of the war in the Middle East, which are likely to fuel inflation and weigh on domestic demand, business investment, and household consumption.

In its baseline scenario, the current pace of adjustment would not fully meet the objectives of the medium-term Budgetary and Structural Plan, nor exit the excessive deficit procedure by the target year mentioned in the official document, which is 2029. Consequently, the IMF believes that France is not, as it stands, adhering to the fiscal trajectory negotiated with Brussels.

To bridge the gap, the institution estimates the necessary effort at approximately 0.8% of GDP per year between 2027 and 2029 and calls on the next government to adopt a new public finance programming law to provide a more solid and predictable framework for budgetary consolidation.

Public Spending at the Heart of the Diagnosis, Rather than Taxes

French public spending reached 57.5% of GDP in 2025, the highest level in the eurozone according to the IMF. The institution believes that future pressures related to aging, defense, digital, and ecological transition necessitate redirecting current and social expenditures towards priority areas deemed essential.

However, the IMF rules out a general tax increase. It notes that France already has one of the highest mandatory contribution rates in the eurozone and argues that further reliance on tax hikes would be « neither realistic nor desirable » due to the risks it poses to business confidence, competitiveness, and growth.

Revenue margins identified instead involve reducing tax breaks or fiscal expenditures deemed inefficient. The core of the adjustment thus relies more on controlling and redirecting spending rather than demanding additional fiscal efforts from taxpayers or businesses.

Pensions, Health, Unemployment: The Social Model Seen as Key Driver

Beyond the overall balance, the IMF explicitly targets major blocks of the social model as levers for adjustment. Regarding pensions, it considers that suspending the 2023 reform has reduced short-term savings and rekindled uncertainty about the system's adjustment. It recommends implementing automatic mechanisms linked to demographic changes, regular sustainability reviews, harmonization of regimes, and incentives to extend working life.

In terms of unemployment insurance, the institution assesses the system as relatively generous for certain groups compared to comparable countries and highlights the risk of it being used as a bridge to retirement. It recommends continuing adjustments concerning eligibility, the duration of compensation, and the conditionality of rights. On health care, the IMF does not suggest a general increase in patient fees but rather « carefully calibrated » copayments for non-essential or non-urgent services, adjusted according to income and health status.

The IMF emphasizes the need to target measures, sequence them carefully, preserve equity, and protect the most vulnerable households. These recommendations, formulated just over a year before the 2027 presidential election, concern politically sensitive subjects and provide a reference point for anticipating the regulatory and budgetary environment in which French economic players will operate.