France’s economy has been resilient in the face of the COVID-19 pandemic and higher inflation, helped by government measures that have supported businesses, jobs and purchasing power, but public debt has risen, according to the latest OECD Economic Survey of France.

OECD projections point to a slowdown in France’s GDP growth from 1.1% in 2023 to 0.8% in 2024, with growth increasing to 1.3% in 2025. In 2024, higher financing costs will hold back private investment and consumption. In 2025, the recovery is expected to be supported by improvements in the global economic outlook and by growing consumption that benefits from a further reduction in price pressures. Inflation is projected to ease to 2.3% in 2024 and 2.0% in 2025, down from 5.7% in 2023.

The budget balance deteriorated and public debt rose markedly during the COVID-19 pandemic, while population ageing is expected to increase public spending in the coming years through higher expenditures on pensions, health care and long-term care. Additional fiscal consolidation efforts are important to reduce public debt more markedly, though the pace of adjustment will need to take into account short-term economic conditions. Containing the wage bill of public administrations and streamlining social, healthcare and tax expenditures would help reduce the deficit. The effectiveness of the fiscal framework could also be strengthened by fully implementing expenditure reviews and by making public spending ceilings binding.

France has implemented ambitious policy efforts to boost competitiveness and employment in recent years. These have included cutting business taxes and reducing social contributions on low salaries, along with reforms to unemployment benefits, apprenticeships and vocational training. Future labour market policies should strengthen incentives for older workers to participate in the labour market and focus support for young people on those with low skills who face difficulties finding a job. Expanding the provision of early childcare services can allow more women to participate in the labour market.

Ensuring quality education for children from an early age is an important pillar of future economic growth. In France, students perform at a similar level to the OECD on average, but the link between socio-economic background and educational outcomes is stronger. Better results could be obtained by making the teaching profession more attractive, allocating more resources to disadvantaged students and raising school autonomy and accountability. Rebalancing education spending towards primary schools could provide greater support to children in the early years of their schooling, which are often the origin of future performance gaps. The use of modern teaching approaches, including cognitive activation practices, which are often associated with better learning outcomes, could be reinforced.

Achieving France’s greenhouse gas emissions targets will require strong policy efforts. Accelerating the phase-out of implicit fossil fuel subsidies and aligning carbon prices across sectors would strengthen the effectiveness of carbon pricing. Large-scale support for electric charging stations, public transport and alternative modes of transport can help to reduce emissions from transport. Simplifying administrative procedures for public financial support would accelerate thermal renovations of dwellings and advance the decarbonisation of the housing sector.

For more information, journalists should contact Johanna Gleeson in the OECD Media Office (tel. + 33 1 45 24 97 00).

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