Businesses seem to be gradually detaching themselves from the political context

Eighteen months after the dissolution of the National Assembly, companies seem to be detaching themselves from the political context, an "empowerment" highlighted by the governor of the Bank of France, or by the president of the CPME, for whom they have learned "to make do".

On December 19, the Bank of France raised its GDP growth forecasts for 2025 and 2026 to 0,9% and 1% respectively, compared to 0,7% and 0,9% previously.

"Nothing to really boast about," the central bank governor, François Villeroy de Galhau, said in essence when interviewed on France Inter.

He noted indeed "a weakness in growth throughout Europe which will have to be addressed", but also, "that economic and budgetary uncertainty is costing France at least 0,2 points of growth".

Like the year 2025, 2026 will thus begin without Parliament having agreed on a budget and the first weeks - at least - will be governed by a special law - adopted unanimously on Tuesday by both houses - allowing only the State to raise taxes and pay the strictly necessary expenses.

But the slight upward revisions, the Bank of France also pointed out, are due to "favorable surprises in activity", notably an unexpected growth of 0,5% in the third quarter.

"Resilient"

Certainly, METI (the movement of medium-sized companies) highlighted two weeks ago a rise in concern among its members, with 54,4% saying they were worried about their company in the next six months, and many highlighting the risks of this situation spreading to recruitment.

But, while the turnover of the mid-sized companies surveyed is down, for 36,8% of them year-on-year at the end of the year (one point higher than in September), it is increasing at the same time for 38,6% (compared to 33% in September).

"The patient is resilient," said Mr. Villeroy de Galhau, "and we must give a tip of the hat to the courage of the entrepreneurs who continue to fight and to the courage of the French who work."

According to the governor, there is now "a form of empowerment of economic life in relation to political life".

Several business climate barometers highlighted this slight improvement in December.

On the side of the National Institute of Statistics (Insee), the business climate indicator has recovered by one point for the third consecutive month, settling just below its long-term average, and at its highest level since June 2024 - the month of the dissolution of the National Assembly by Emmanuel Macron.

"Limited impact"

The Flash PMI index published by S&P Global and HCOB bank showed a very slight expansion in private sector activity for the second consecutive month, after fourteen uninterrupted months of contraction.

"Growth is holding up," comments Anthony Morlet-Lavidalie, economist for France at the Rexecode Institute - which shows the same forecasts as the Bank of France for 2025 and 2026.

He highlights "a positive surprise in business investment" and is now less concerned for businesses about "economic and political uncertainty which seems to have a limited impact on activity" than about "tax increases likely to weigh on their competitiveness" in the next budget.

CPME President Amir Reza-Tofighi also spoke to AFP about "discredited political discourse," since, while former Prime Minister François Bayrou vigorously advocated for cuts in public spending, "in the end, all that is being talked about is tax increases," particularly for businesses.

However, he "doesn't think we'll have an economic crisis".

According to him, the situation for businesses "is not black and white" at the moment, even if there is "a slowdown, some investments or hirings are delayed".

Overall, he says, "entrepreneurs have taken a step back from all of this, they have learned to deal with" this political situation.