(Bloomberg) -- French business confidence dropped for the third consecutive month in December, adding to signs that a prolonged political and budget impasse is debilitating the country’s economy.
Insee’s gauge of sentiment fell two points to 94, the lowest level since July, which was when President Emmanuel Macron dissolved the National Assembly and called elections, rattling businesses and investors. Economists polled by Bloomberg had forecast an unchanged reading.
Prolonged political upheaval and uncertainty over France’s budget are increasingly weighing on businesses, dampening their investment and hiring plans.
Macron appointed Francois Bayrou prime minister to bring together a new government and a plan to repair public finances after Michel Barnier was dismissed in a no-confidence vote in December. But negotiations over the composition of a cabinet are dragging and France will go into the new year without a full budget and reliant on emergency legislation to avoid a shutdown.
Insee’s business survey was conducted over a period that spanned the collapse of Barnier’s government and the 2025 budget plan. All sectors recorded a decline, with the exception of industry where confidence was stable.
The cross-sector measure of the employment climate fell to 96, also the lowest since July. The long-term average for Insee’s indicators is 100.
Earlier this week, the statistics agency said it expects growth will remain modest in the first half of the year unless the uncertainty is quickly lifted. The Bank of France also cut its forecasts and now expects growth of only 0.9% in 2025.
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