Political Uncertainty in France Dampens Business Investment and Economic Outlook for 2026

Recent political instability in France, marked by government dissolution, leadership changes, and a fragmented National Assembly, is severely impacting business confidence and investment decisions as 2025 progresses. According to a survey cited by Lyon-Entreprises, 67% of entrepreneurs are very worried about the political situation following the fall of Prime Minister Michel Barnier in April 2025. This anxiety translates into tangible economic behavior: 23% of entrepreneurs are considering canceling investments, while 43% are opting to postpone them in hopes of greater stability. This cautious stance is slowing hiring and growth activities, as many businesses prioritize conserving resources amid unclear political and regulatory conditions.

Financial institutions continue to offer low-interest loans, yet entrepreneurs remain hesitant to incur new debt without clear policy signals. The economic repercussions of this political turbulence could be severe, with an estimated cost of up to 15 billion euros, equivalent to a 0.5% hit to GDP growth and a 7 billion euro reduction in fiscal revenue. This downturn threatens to undermine France’s competitiveness by stalling innovation and ecological transition investments, potentially exacerbating social inequalities.

These economic concerns are echoed by industry leaders in the plastics sector, where regulatory pressures, notably new eco taxes on plastic packaging, are expected to make 2026 more difficult. Yvan Riva, head of AG Plast, highlighted that increasing regulations are overwhelming the industry, with wider impacts anticipated in the coming year. Laurent Wauquiez, president of La Droite républicaine group, advocates for reducing public spending instead of raising taxes to alleviate pressure on businesses.

Overall, political uncertainty and a stringent regulatory landscape are casting a long shadow over France’s economic prospects, causing many entrepreneurs and industry leaders to brace for a challenging 2026.