The High Council of Public Finances (HCFP) deemed the government’s updated economic scenario “coherent” on Wednesday, taking into account the conflict in the Middle East. However, they warned of strong uncertainties and a lack of clarity regarding the impact on this year’s public deficit.
Earlier this month, the government lowered its growth forecast for 2026 to 0.9%, down from the previously expected 1%, and raised the inflation forecast to 1.9%, up from the previous 1.3%.
To create these predictions, they considered a scenario of progressive relaxation leading to the maintenance of oil prices at $100 until the end of May before falling to $80 by the end of 2026.
“Under this hypothesis of progressive normalization in the second semester, the High Council believes that the government’s updated economic scenario for 2026 is coherent,” they stated in a report.
However, they added that this scenario “remains subject to a major risk related to the evolution of the international environment.”
Despite the economic slowdown, the government has maintained its objective of reducing the public deficit to 5% of the gross domestic product (GDP). To achieve this goal, they announced that six billion euros of expenses could be halted this year, with four billion euros for the state and two billion euros in the social sphere.
The impact of these measures on national accounting expenses and, ultimately, on the public deficit has not been clarified. It will require effective implementation of announced savings measures and the absence of non-financed discretionary measures in response to the crisis to meet the deficit target.
For now, the government has ruled out any generalized measures, such as reducing fuel taxes, in favor of targeted support measures for sectors most affected by rising energy prices.
(Authored by Blandine Hénault, edited by Zhifan Liu)
