Political Instability in France Severely Impacts Economic Activity and Business Confidence in 2025

France's ongoing political instability, marked by uncertainty since June 2024 and exacerbated by the political dissolution in June 2025, is stalling the country's economy. According to Benoît Derigny, president of ManpowerGroup France, the institutional turmoil has led to a six-month pause in economic activity, with companies hesitant to invest or hire amid unclear fiscal policies and the potential delay of retirement reform impacting workforce planning.

Economic sectors across France are witnessing the effects of this instability. Consumer spending has slowed considerably, with furniture sales dropping by 2.5% and automobile sales down by 6.3%. Restaurants are also seeing reduced patronage, as customers opt for more economical choices. This shift towards cautious consumer behavior is driven by worries over the political future and its implications on personal finances. For example, a public servant named Nicolas said he is postponing furniture purchases for his new apartment due to the uncertain government situation.

Businesses are reporting similar caution. Many report fewer client requests and have frozen investments and hiring, waiting for political clarity before moving forward. Landscaper David Rommel described the business climate as "frozen for now since we don't know what the situation will be tomorrow."

Overall, the economic cost of this political fragility is estimated at around €15 billion. Derigny emphasized that this uncertainty particularly complicates planning for 2026, as companies face challenges in budgeting and managing employee transitions against a backdrop of postponed retirement reforms.

The compounded effects of political crisis, cautious consumer spending, and investment freezes paint a troubling picture of France's economic outlook as it enters the final quarter of 2025.