France's economic resilience to war fallout is crumbling as business activity plunged at its fastest pace in over five years. Output stagnated at the start of 2026 with consumers cutting spending and investment, while unemployment hit a decade-high, raising the risk of GDP contraction in Q2.

The deteriorating outlook undermines efforts to reduce the budget deficit, with the government's 0.9% growth forecast now appearing out of reach. Even the modest target to narrow this year's fiscal gap to 5% from 5.1% may prove unachievable without fresh spending controls, complicating fiscal adjustment.

Prime Minister Sebastien Lecornu will unveil support measures for firms and households affected by rising energy bills, but the fiscally cautious approach limits assistance. The economic weakness creates political volatility ahead of next year's presidential election where Emmanuel Macron cannot run and the far-right hopes to capitalize on cost-of-living concerns.