France

Activity durably hampered by political uncertainty

In 2025, activity was once again largely supported by public spending and the continued recovery in aerospace exports. Although the passage of the 2026 budget at the beginning of the year reduced short-term political and fiscal uncertainty, domestic demand could continue to be impacted. The behaviour of households, whose precautionary savings have reached historic levels, remains uncertain. Despite durably low inflation, which could bring about wage growth in real terms, job creation is expected to continue to slow.

Although lower interest rates will encourage a recovery in investment in capital goods, as was the case in the third quarter of 2025, this rebound is also uncertain, as shown by the backlash in the following quarter. At the end of 2025, the wait-and-see attitude of businesses also resulted in the creation of fewer permanent contracts and more fixed-term contracts. Against a backdrop of continued sluggish demand and ongoing repayment of state-guaranteed loans, businesses will continue to face a challenging environment. Bankruptcies are expected to stabilise at a high level, after exceeding 68,000 in 2025, which is 42% more than before the pandemic. As the 2026 budget does not include any significant cost-cutting measures, public spending is expected to make a positive contribution to growth once again in 2026. Aerospace exports are expected to continue their rebound given the order books, other industries will nonetheless remain dependent on the shaky recovery of the German economy.

Lack of a solid majority thwarts attempts to overhaul public finances

In line with recent years, the budget deficit will remain very high in 2026. The lack of a solid majority does not bring about significant spending cuts or sharp tax increases, in comparison with the 2025 budget. Therefore, the reduction in the public deficit will be very gradual. At the same time, interest charges will continue to rise rapidly in the wake of financing rates, which are now among the highest in the major eurozone economies. Public debt will continue to rise rapidly and its sustainability will be the main challenge for the French economy, against a negative backdrop of political instability.

The current account deficit is expected to remain low in 2026. Exports will be driven by aeronautics, while imports are expected to stay curbed by relatively low oil prices. The surplus in the services balance (1.9% of GDP) will be insufficient to offset the deficit in the goods balance (-2.1% of GDP). The current account deficit is financed by debt issues or listed shares purchased by non-residents. At the end of September 2025, non-residents held more than half of the securities issued by government agencies (54%), non-financial corporations (62%) and French banks (71%).

Political instability caused by a historically fragmented National Assembly

In power since 2017, President Emmanuel Macron of the centre-liberal Renaissance party was re-elected for a second term in April 2022. Although he again defeated Marine Le Pen of the far-right National Rally (RN) in the second round, the margin was narrower in 2022 (58.5% to 41.5%, compared to 66% to 34% in 2017). In the parliamentary elections that followed two months later, his party won only 170 out of the 577 seats in the National Assembly, the lower house of Parliament. The coalition with two other centre-right parties managed to secure only a total of 250 seats, which forced the government to pass budgets and reforms without a vote in the National Assembly due to the lack of a majority, thereby running the risk of a vote of no confidence. In June 2024, following the RN's landslide victory in the European elections, President Macron decided to dissolve the National Assembly. The subsequent legislative elections resulted in an even more fragmented National Assembly divided into three blocs, none of which had an absolute majority. The left-wing NFP alliance won 192 seats (including 72 for the far-left LFI party), the centrist Ensemble coalition 164 and the RN 143. President Macron appointed Michel Barnier (LR, right) as Prime Minister, who lost a vote of no confidence by the National Assembly in December 2024, and later the centrist François Bayrou, who in turn lost a no-confidence vote in September 2025.

Their successor, Sébastien Lecornu (centrist), also depends on the support of the LR and the Socialists. Like his predecessors, he is under constant threat of a vote of no confidence. Although he was appointed a second time by President Macron after resigning in October 2025 following a deadlock in negotiations over the 2026 budget, the risk of yet another vote of no confidence or his resignation cannot be ruled out. At the end of December 2025, failure to agree on the 2026 budget forced the government to pass emergency legislation to ensure the continuity of the French state. In early 2026, the government finally succeeded in passing a budget without significantly reducing the deficit thanks to concessions made to the PS (limited spending cuts) and the LR (limited tax increases). As a result, they did not vote in favour of the motions of no confidence that followed the budget's approval.

In light of this unprecedented fragmentation, which makes it impossible to carve out a lasting majority, the scenario of dissolving the National Assembly (the lower house of Parliament) and calling new legislative elections seems likely in the long term. The exact timing of such a decision is uncertain yet, especially given the fact that all eyes are already on the 2027 presidential elections, which will likely be followed by a fresh round of legislative elections. However, given the fragmentation and polarisation of the political landscape, it is far from certain that a stable majority will emerge from these elections. The risk of political instability therefore remains particularly high in the short term and potentially in the medium term as well.

Payment

Bank cards are now the most commonly-used form of payment in France, although cheques are still widely used. In value terms, cheques and transfers are still the most popular forms of payment.

If a cheque remains unpaid for more than 30 days from the date of first presentation, the beneficiary can immediately obtain an enforcement order (without need for further procedures or costs). This is based on a certificate of non-payment provided by the creditor’s bank, following a second unsuccessful attempt to present the cheque for payment and when the debtor has not provided proof of payment within 15 days of receipt of a formal notice to pay served by a bailiff (Article L.131?73 of the Monetary and Financial Code).

Bills of exchange, a much less frequently used payment method, are steadily becoming rarer in terms of number of operations – although they remain important in terms of total value. Bills of exchange are still an attractive solution for companies, as they can be discounted or transferred and therefore provide a valuable source of short-term financing. Moreover, they can be used by creditors to pursue legal proceedings in respect of “exchange law” (droit cambiaire) and are particularly suitable for payment by instalments.

Bank transfers for domestic or international payments can be made via the SWIFT electronic network used by the French banking system. SWIFT offers a reliable platform for fast payments, but requires mutual confidence between suppliers and their customers. France is also part of the SEPA network.

Debt Collection

Unless otherwise stated in the general sales conditions, or agreed between the parties, payment periods are set at thirty days from the date of receipt of goods or performance of services requested. Interest rates and conditions of application must be stipulated in the contract – otherwise the applicable interest rate is that applied by the European Central Bank in its most recent refinancing operations. Throughout the first half of the year in question, the rate applicable is that in force on January 1 and for the second half year in question, the rate applicable is that in force on July 1.

Amicable phase

During this phase, the creditor and the debtor try to reach an amicable solution via direct contact in order to avoid legal procedures. All documents signed between the parties (such as contracts and invoices) are analysed. Where possible, the debtor can be granted an extended time period to pay his debts, with the period’s length negotiated as part of the amicable settlement.

Legal proceedings

Order for payment (injonction de payer)

When a debt claim results from a contractual undertaking and is both liquid and undisputable, creditors can use the injunction-to-pay procedure (injonction de payer). This flexible system uses pre-printed forms and does not require the applicants to argue their case before a civil court (tribunal d’instance) or a competent commercial court (with jurisdiction over the district where the debtor’s registered offices are located). By using this procedure, creditors can rapidly obtain a court order which is then served by a bailiff. The defendant then has a period of one month in which to dispute the case.

Fast-track proceedings

Référé-provision provides creditors with a rapid means of debt collection. If the debtor is neither present nor represented during the hearing, a default judgment can be issued. The court then renders a decision, typically within seven to fourteen days (though same-day decisions are possible). The jurisdiction is limited to debts which cannot be materially contested. If serious questions arise over the extent of the debt, the summary judge has no jurisdiction to render a favourable decision. Judgments can be immediately executed, even if the debtor issues an appeal.

If a claim proves to be litigious, the judge ruled competent to preside (juge des référés) over urgent matters evaluates whether the claim is well-founded. If appropriate, the judge can subsequently decide to declare himself incompetent to rule on the case. Based on his assessment of whether the case is valid, he can then invite the plaintiff to seek a ruling through formal court procedures.

Ordinary proceedings

Formal procedures of this kind enable the validity of a claim to be recognised by the court. This is a relatively lengthy process which can last a year or more, due to the emphasis placed on the adversarial nature of proceedings and the numerous phases involved. These phases include the submission of supporting documents, written submissions from the litigants, the examination of evidence, various recesses for deliberations and, finally, the hearing for oral pleadings (audience de plaidoirie).

Proceedings are issued through a Writ of Summons (Assignation) which is served on the debtor 15 days before the first procedural hearing. During this hearing, the court sets a time period for the exchange of pleadings and discovery. Decisions rendered do not necessarily have the possibility of immediate execution. In order to be executed, they must first be served on the debtor. They are also subject to appeal.

Enforcement of a Legal Decision

Unless the court decision is temporarily enforceable, enforcement can only commence if no appeal is lodged within one month and must occur within ten years of notification of the court’s decision. Compulsory enforcement can be requested if the debtor does not comply with the judgment. Obligations to pay can be enforced through attachment (of bank accounts or assets) or through a third party which owes money to the debtor (garnishment).

France has adopted enforcement mechanisms for decisions rendered by other EU member countries. These mechanisms include the Payment Order under the European Enforcement Order. Decisions rendered by non-EU members can be recognised and enforced, provided that the issuing country is party to a bilateral or multilateral agreement with France. In the absence of an agreement, claimants are obliged to use the French exequatur procedure.

Insolvency Proceedings

French insolvency law provides for six procedures to undertake restructuring or avoid insolvency. These are either assisted proceedings or proceedings controlled by the court.

ASSISTED PROCEEDINGS

These can be either mandated ad hoc or via conciliation proceedings. Both are informal, amicable proceedings, where creditors cannot be forced into a restructuring agreement and the company’s management continues to run the business. These negotiations are governed by contractual law throughout their duration. The proceedings are conducted under the supervision of a court-appointed practitioner (a mandataire ad hoc, or a conciliator) in order to help the debtor reach an agreement with its creditors. Both of these types of proceedings are confidential but conciliation can eventually be made public if the debtor has the approval of the commercial court. Nevertheless, the terms and conditions of agreements remain confidential and can only be disclosed to signatory parties.

COURT-CONTROLLED PROCEEDINGS

The four types of court-controlled proceedings are judicial reorganisation, judicial liquidation, sauvegarde, and Accelerated Financial Sauvegarde proceedings (AFS).

In all four proceedings, any pre-filed claims are automatically stayed. Creditors must file proof of their claims within two months of publication of the opening judgment, or four months for creditors located outside France. Debts which arise after proceedings commence are given priority over debts incurred beforehand. Certain types of transactions can be set aside by the court, if they were entered into by the debtor during a hardening period (before a judgment opening a judicial reorganisation or a judicial liquidation).

With Court-Controlled proceedings there can be variations in the extent of involvement of the court-appointed conciliator. The sauvegarde and AFS procedures are debtor-in-possession proceedings, but with judicial reorganisation, the court can decide whether to set aside the company’s managers. The role of management is particularly reduced in cases of judicial liquidation, as the debtor company usually ceases to conduct business. Nevertheless, the court can decide for a business to continue operating under a court-appointed liquidator.

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Last updated: February 2026