French economy keeps growing despite political and Budget chaos

[PARIS] France’s economy kept growing at the end of 2025 as households shrugged off political upheaval and the risk of austerity.

Its fourth-quarter output rose 0.2 per cent, supported by stronger consumer spending and investment, statistics agency Insee said. This marks a slowdown from the previous three months, but matched the median estimate of analysts surveyed by Bloomberg.

The data precedes numbers from the region’s other top economies, with Spain, Germany and Italy all expected to report expansion later on Friday (Jan 30), before the statistical office of the European Union Eurostat publishes a reading for the eurozone as a whole.

Economists estimate that the bloc’s gross domestic product rose 0.2 per cent between October and December, slightly slower than in the previous three months.

The continent is holding up well after US President Donald Trump raised tariffs in 2025, though it is on alert again over new levies following his latest trade threats over Greenland.

It can, at least, breathe easy with regard to inflation, which is settling around the European Central Bank’s target, keeping interest rates steady at 2 per cent.

In France, the second half of 2025 was clouded by another government collapse, and rows over tax hikes and spending cuts that are needed to rein in a gaping Budget deficit. 

However, consumer spending growth accelerated to 0.3 per cent, even as a separate report showed that outlays declined on the month in December, as households held back on manufactured goods and food.

Amid warnings from business groups that the crisis would spark a downturn, companies’ investment in the fourth quarter fell slightly. Household investment, however, rose 1.1 per cent.

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In 2025, the country’s GDP rose 0.9 per cent, matching the pace that the government was banking on in its Budget plans.

France’s political and fiscal outlook has also improved in recent days, as Prime Minister Sebastien Lecornu advanced a compromise Budget through parliament.

The finance Bill contains less belt tightening and fewer tax increases than initially planned, after the government made concessions to opposition parties. BLOOMBERG