Jobs cut, France’s rating deteriorated, rising unemployment, unstable political and economic situation…: for INSEE, the climate risks being gloomy in 2025

The morale of the French is unlikely to rise again in 2025. And for good reason: French GDP growth should not exceed 0.2% in the first and second quarters of 2025. At the same time, unemployment is expected to jump to 7.6%, news which does not allow for a glimpse of “good prospects” economic conditions for France next year, warns the National Institute of Statistics (Insee) in its economic report published this Tuesday, December 17.

Unemployment will start to rise again

“The signals emerging from household and business surveys paint a gloomy landscape,” affirmed the head of the INSEE economic department, Dorian Roucher, who nevertheless does not rule out “best results if confidence (in the economic situation of France, Editor’s note) comes back quickly.”

With job cuts planned “in the private sector, particularly among apprentices, employment should slow down significantly in the public sector”, warned INSEE. In total“only 40,000 positions will be created in three quarters, mainly non-salaried. A rhythm “insufficient to absorb the increase in the active population”warned the institute. This would increase unemployment from 7.4% to 7.6% of the working population by mid-2025. An increase also due to the retirement reform, underlined INSEE.

A “slight” recovery in consumption

INSEE is betting on a “slight recovery in consumption” by mid-2025but nevertheless warns that it will remain “very fragile”, “Our results will be linked to business confidence, but also to household confidence”. A bet that is far from being won, because, without a budget, the business climate deteriorates and household morale declines, giving way to a “collective gloom”, as predicted by the end of 2024 when growth should be zero. However, Dorian Roucher reassures, “there is no technical recession”, he said on the set of BFMTV Business

An unstable political situation which is putting a damper on investor confidence

Especially since this context is largely favored by the unstable political situation that the country is going throughlikely to lead to significant consequences on consumption and employment and doing weaken the investor confidence index, already in sharp decline in 2024. Moreover, rating agencies such as Moody’s have downgraded France’s financial rating to Aa3a decision of which the resigning Minister of Economy and Finance, Antoine Armand, declared “to take note” last week.

This decision “reflects our view that the country’s public finances will be significantly weakened over the coming years”due to a “political fragmentation more likely to prevent significant fiscal consolidation”, the agency explained.

An exceptional joint call between companies and unions

Faced with these “gloomy” prospects, exceptional fact, union and employers published a joint appeal signed on the employers’ side by Medef, the CPME, the U2P and by all the major unions except the CGT on the workers’ side, the latter having refused to validate an appeal “which may be perceived as a blank check” to François Bayrou.

“Find it as soon as possible” stability

Twe ask to “find it as soon as possible” stabilityserenity, visibility and “to have a spirit of responsibility”given the economic and social issues which pose the threat of a major crisis. As shown by the case of the agreement on unemployment insurance which risks leaving job seekers penniless from January 1, 2025 if it is not validated by the government by this Friday 20 December.