The economic and political situation in France has dramatically intensified.
The economic and political situation in France has dramatically intensified in recent months. While Germany faces its own economic challenges, its largest neighbor and important EU partner is heading toward a serious crisis that has the potential to affect the entire Eurozone. France is facing a budget deficit of 5,8 percent (2024) and a debt ratio of 114 percent of GDP.
The German economy is also showing weaknesses: in the second quarter of 2025, GDP shrank by 0.3 percent adjusted for price, seasonal, and calendar effects, as reported by the Federal Statistical Office. Unlike France, Germany's debt ratio is relatively low at 62.3 percent of GDP according to Focus, which provides German fiscal policy with some room for maneuver, even though the economic trend is causing serious concerns.
The Banque de France expects growth of only 0,7 percent for 2025. Weak international demand and consumer reluctance to spend are dampening economic development. Germany recorded a decline of 0,2 percent in 2024 and got off to a weak start in 2025.
Despite national debt, France has developed into an attractive destination for foreign direct investment. The country recorded the highest number of new business settlements in Europe in 2024. Initiatives such as the French Tech program, tech visas, and the VivaTech conference have helped France build a dynamic startup scene. However, French companies are currently investing less. The Banque de France expects investments to decline by 0,5 percentage points in 2025.
MK
