Marc Touati argues that France and the euro zone are sliding into recession, with public deficits, debt, business failures, and inflation all worsening at once. He frames the latest INSEE/Bank of France/Treasury data as validation of his long-running bearish view, and says the government is failing to respond with credible policy.
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Marc Touati’s core thesis is straightforward and strongly bearish: France is already in recession, the euro zone has also tipped into contraction, and the situation is deteriorating fast through a combination of weaker growth, higher deficits, rising debt-service costs, surging bankruptcies, and reaccelerating inflation. He presents recent statistics from INSEE, the Banque de France, Eurostat, and a Treasury note as proof that the “truth” he has been arguing for months is now being recognized by institutions. On growth, he says the French economy contracted by -0.1% in Q1 2026, but that the underlying picture is much worse once inventory accumulation is stripped out: he claims GDP excluding stocks fell 1.1%, a move he says has only been seen twice since 1950 outside of exceptional shocks, namely May 1968 and the start of the 2020 pandemic. …
Near term, the setup is still negative for France and the euro zone: weak growth prints, higher bankruptcies, and sticky inflation keep the pressure on. The main tactical risk is that any stabilization in PMIs or a softer inflation print could briefly challenge the bearish narrative.
Over the next few months, Touati’s base case is continued deterioration in French growth and public finances, with unemployment and credit stress worsening as the lagged effects of weak activity feed through. The view would improve only if growth, fiscal receipts, and core inflation all surprise positively at the same time.
Structurally, he is arguing that France is stuck in a low-growth, high-deficit, high-debt regime that policy has not been able to escape. If that framework is right, the long-run implication is persistent fiscal fragility and weaker competitiveness relative to faster-growing economies.
France is already in recession and the recession will worsen.
He cites INSEE and Banque de France revisions and argues the Q1 GDP drop understates the underlying weakness.
The French public deficit will exceed official forecasts and could reach above 6% of GDP by 2027.
He says Treasury projections already imply 5.2% in 2026 and 6.2% in 2027, and that his own expectations are even worse.
France is the ‘lanterne rouge’ of the world economy based on PMI readings.
He compares France’s PMI at 44.9 with higher readings in India, China, the US, Japan and others.
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