Economy 2026: The High Council of Public Finances approves a "coherent" scenario despite uncertainties linked to the war

Economic forecasts adjusted in a crisis context

In its annual progress report (APR), presented Wednesday in the Council of Ministers, the government details its trajectory to bring the public deficit below 3% of gross domestic product (GDP) by 2029.

In this context, the executive branch has revised its assumptions:

• Growth for this year has been lowered by 0,1 points, to 0,9%
• Inflation has risen, from 1,3% to 1,9%

These projections, submitted to the HCFP at the beginning of the month, are considered "consistent" by the institution, provided they assume "a gradual normalization (of the conflict) in the second half of the year." Otherwise, they would remain "subject to a major risk."

Public deficit: still limited improvement

The government is maintaining its public deficit forecast at 5% of GDP for 2026. A moderate improvement after two years of more significant reductions:

• 5,1% in 2025
• 5,8% in 2024

But the budgetary situation remains constrained. As Carine Camby pointed out, "The 2026 fiscal year started without any budgetary leeway even before the start of the conflict in the Middle East."

Inflation and fuel prices: a negative impact on the state

The High Council highlights a key point: the rise in energy prices does not benefit public finances.

According to him, the inflationary shock on fuels "has not created a windfall", and could even lead to "a decrease in activity, and to an additional reduction in social security contributions which will be due to the likely increase in the minimum wage this summer".

In this context, budgetary efforts become crucial. The HCFP insists that "the effective implementation" of the six billion in savings announced on Tuesday "will be absolutely essential and will require very rigorous budgetary management."

Target 2029: efforts to be undertaken quickly

To achieve a deficit of less than 3% of GDP by 2029, significant measures will need to be taken quickly.

Carine Camby warns that "significant adjustment measures will be essential from 2027 onwards to meet the objective".

She also points to a discrepancy in the documents submitted, with the government initially mentioning four billion in savings before announcing six billion.

"We should have been able to assess these measures for the correct amount," she lamented.

A strategy adapted to an evolving crisis

For its part, Bercy justifies this development by the instability of the geopolitical context.

The ministry emphasizes the "evolving" nature of the situation in the Middle East. Initially set at four billion, the savings target was raised to six billion by Prime Minister Sébastien Lecornu, "responsibly," because "the conflict is still ongoing."