INSEE has just published its first estimate of the growth figures of the French economy in the 1st quarter of 2026, i.e. 0%. Comments about this stagnation do not seem to have understood the nature of the problem. Just because we went from +0.2% in the 4th quarter of 2025 to 0% does not mean that there is a new fact. The imprecision of the numbers after the decimal point should be taken into account. Secondly, a comparison is made between the crisis in the Middle East and the results of the 1st quarter. In reality, this very low growth, not to say stagnation, is not a new phenomenon. On average over the past ten years, it has been close to 1% and it has only exceeded 2% once, in 2018.
The cause of this mediocre result lies in the sluggishness of domestic demand. Household consumption fell by 0.1% as did their investments (-0.7%) while those of non-financial companies fell by 0.2%. This drop in activity has barely been compensated by the increase in public spending, which is financed by debt. The contribution of foreign trade was negative by 0.7% while that of inventories increased by 0.8%. In reality, this data is artificial because it is the result of supply problems in aircraft manufacturing. Due to delays in the manufacture of engines, a number of aircraft could not be delivered, resulting in lower growth in exports, but production lines continued to run, resulting in an increase in inventories.
Despite the rise in energy prices from February, inflation remained below 2% in March, a figure below the euro zone average. As for unemployment, it is still not falling with a rate of 7.7%, much higher than in Germany (4.3%) and Italy (5.2%). At the end of the 1st quarter, there were 11,700 fewer jobs. On the other hand, the deterioration in the public finance situation is accentuated with a debt of around 110% of GDP, even if the downward revision of the deficit for the year 2025 to 5.1% against 5.4% estimated is good news.
Finally, although this was one of the major objectives of the economic policy of successive governments, along with employment, the foreign trade situation is not improving, particularly with regard to manufactured goods. Reindustrialisation and the improvement of the competitiveness of companies are not on the agenda despite the tens of billions in reductions in social security and tax contributions that have been granted and which are one of the causes of the deterioration of public finances since 2012.
In 2025, the trade deficit in FOB-FOB data was 65 billion and 19 billion excluding energy, despite a strong rebound in electricity exports. During the month of February, the deficit in capital goods reached the same level as that of the energy balance, i.e. 3.3 billion. All these data show the extent to which the economic policy objectives of recent years have not been achieved.
Comments on the latest published figures focus on the deterioration of the international environment, which is said to be the main cause of this mediocre performance. Concern would push households to consume less and give up buying housing and companies to invest. However, the stagnation of investment is not a new phenomenon and was already present when France benefited from very low or even negative interest rates, which would have greatly reduced the cost of borrowing. Over the last twelve months, the number of new housing starts is down 27% compared to the average of the last five years.
The explanation generally put forward for this poor performance is the uncertainty created by the international environment with, since the Middle East war, the inflationary consequences of the blockage of the Strait of Hormuz. If, as far as energy is concerned, the impact is obvious, for the rest, and in particular the very weak growth observed over the past fifteen years, the reason lies elsewhere. It is always easy to explain, when the objectives are not achieved, that it is the fault of others. The reality is quite different.
Two factors have played a decisive role, demography and the rise in inequality. While the increase in life expectancy is good news, the fall in the birth rate is bad news and the combination of these two new trends is weighing on growth. With age, we consume less and either we are already homeowners or we are forced to remain tenants because after the age of 65, no bank lends, hence the fall in new construction in recent years. As for family policy, with the abolition of tax advantages above a certain income and the limitation of family allowances, it has not contributed, quite the contrary, to achieving the objectives for which it was created.
But the most decisive factor remains the rise in inequality, with the consequent rise of populist and extremist political formations. The United Kingdom with Nigel Farage's party, Germany with the AfD and the United States under Donald Trump are facing similar political tensions. France is therefore not an isolated case, but the impact on growth is more pronounced. The policy, which consisted of financing tax and social security reductions through public debt, mainly benefited large groups, most of which did not use the funds to invest, innovate and create jobs.
They have largely compensated their shareholders by increasing their dividends and buying back shares, which have driven up prices. They generously gave salary and bonus increases to management teams. And they have embarked on costly acquisitions abroad that have sometimes even proved disastrous. Finally, they have not relaxed their pressure on their suppliers, i.e. on the country's industrial fabric, with tight prices and often excessive payment terms. At the same time, by pretending, with the support of successive governments, that the cost of labour was too high, they kept up the pressure on wages.
The two engines of growth, investment and consumption, have therefore been restricted. As for foreign trade, it has in no way benefited from these transfers made in the name of competitiveness. On the other hand, the financial savings rate of households is breaking records. This is wrongly attributed to their concern about the international situation. It is the result of rising inequality. From a certain level of income, consumption no longer follows and the rest goes into savings products.
Net inflows from life insurance amounted to €19.7 billion in the first quarter. Outstanding loans at the end of 2025 reached 2,115 billion, up 94 billion over one year. The publication at the end of the month of detailed growth figures for the first quarter will include data on household financial savings. Its rate, as a percentage of gross disposable income, is therefore not expected to fall but to return above 9%, which will be perfectly consistent with the weakness of consumption and investment in housing.
The stagnation of the French economy is not new and is not a cyclical phenomenon. As long as the government has not identified the causes and corrected past economic policy mistakes, this situation will continue