French GDP Contracts 0.1% in Q3 as Budget Deadlock Deepens Fiscal Concerns

France's gross domestic product fell 0.1% in the third quarter, leaving the eurozone's second-largest economy on the brink of recession after stagnation in the second quarter and a 0.2% contraction in the first, Insee reported Friday. Inflation rose to 3.4% year on year in October from 3.1% in September, the highest level since January 2024. The figures landed as France's borrowing rates climbed above 5% on financial markets last week, ahead of a new nationwide protest over the cost of living. Economy and Finance Minister Roland Lescure called the economy "at a standstill" and warned the country "will hit the wall" if the 2027 budget is not adopted. The government, lacking a parliamentary majority, has not ruled out using article 49.3 of the Constitution or governing by ordinance — a procedure never used to pass a budget since the Fifth Republic's creation in 1958. The 10-year French bond yield stood at 4.9% Friday, 0.17 point below its October 22 peak, with the French-German spread near 1.55 points.