France's Economy: Modest Growth Amidst Political Fog

France's economy is estimated to have achieved modest growth of at least 0.2% in the fourth quarter of last year. This expansion was primarily propelled by robust activity within the aerospace and defense industries throughout December, injecting momentum into the industrial sector. Services contributed with more moderate gains, while the construction sector experienced stagnant activity.

The outlook for January suggests a potential slowdown in industrial output, attributed to reduced aerospace production and increased uncertainty. Conversely, the service sector anticipates a resurgence in activity, aligning with a decade-long average pace. Construction is expected to maintain its current trajectory, with finishing work continuing to outpace structural projects.

Despite these economic indicators, a significant level of uncertainty persists, particularly concerning the 2026 budget. Lawmakers are navigating complex procedures to pass the budget, with speculation of using special constitutional powers to bypass parliamentary deadlock.