France: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France

A strong and timely policy response helped cushion the impact of the COVID19 pandemic and the energy crisis resulting from Russia’s war in Ukraine. Despite a recovery slowdown in 2023, the French economy has remained relatively resilient in the face of financial tightening and weaker euro area external demand. Nevertheless, the crisis response and slower-than-expected recovery have weighed on public finances, with a sizable fiscal underperformance in 2023 reducing fiscal space at a time of rising investment needs for the green and digital transformation. While financial conditions started improving in early 2024, market pressures on sovereign spreads and stock markets rose in early June following the European elections amid political uncertainty. Labor market performance has remained robust, although labor productivity remains below its pre-COVID trend. Against this backdrop, the French authorities have appropriately shifted their focus towards rebuilding buffers and achieving a sustainable modernization of the economy. The reforms of the pension and unemployment benefit systems have already started to yield results. Parliamentary elections are scheduled for June 30 and July 7. The Staff Report was completed on June 17.