French Business Confidence Falls to Two-Year Low Amid Political Uncertainty
French business confidence has dropped to its lowest point in two years, as ongoing political instability continues to weigh on corporate sentiment, according to the latest S&P Global Business Outlook survey.
The net balance of companies expecting higher business activity over the next 12 months fell sharply to +6% in October, down from +18% in June. This decline placed France at the bottom of global business confidence rankings, signaling a clear loss of momentum in the country’s economic outlook.
Manufacturing firms were notably pessimistic, marking the first time in a year that production expectations turned negative. Service companies, while still optimistic, showed only marginal confidence.
The ongoing political turbulence has also led to hesitation in business planning, with firms adopting neutral positions on both hiring and investment. The net balance for employment growth dropped to +1% from +4%, while capital expenditure plans turned slightly negative at -1%. Among manufacturers, sentiment was far weaker, plunging to -17%, the lowest since June 2020.
Forecasts for research and development (R&D) investment also weakened, falling to -4%, while corporate profit expectations declined sharply to -10%, marking the most negative reading since June 2024. Manufacturers were particularly downbeat at -16%, compared to -9% among service providers.
Meanwhile, inflation expectations edged higher but remained near long-term averages. A net balance of +31% of firms expect higher staff costs, and +24% foresee increases in non-staff expenses, including raw materials and energy prices.
In response, more companies plan to raise output prices, with the net balance climbing to +15%, the highest in a year. This upward movement was largely driven by service providers, while manufacturers showed reduced pricing intentions.
According to Joe Hayes, Principal Economist at S&P Global Market Intelligence, “uncertainty is weighing heavily on expectations for business activity,” emphasizing the need for a resolution to France’s political deadlock to restore growth momentum.
