ECB’s Villeroy: French Economy Proving Resilient, Stronger Than Expected

By IFCCI News Desk
Data verified and updated as of November 2025

European Central Bank (ECB) Governing Council member François Villeroy de Galhau said the French economy is demonstrating stronger-than-anticipated resilience, even as the euro area continues to navigate weak external demand, tight financing conditions, and lingering inflation pressures.

Speaking during a media briefing in Paris, Villeroy noted that France’s economic fundamentals have held up better than many earlier projections suggested. He emphasised that the combination of steady employment, stabilising household consumption, and improving business sentiment has helped cushion the economy against broader European headwinds.

Employment Stability and Consumption Support Growth

Villeroy highlighted that the French labour market remains “remarkably robust,” with employment growth holding near multi-year averages and wage dynamics gradually normalising.
He said this stability has helped underpin household spending, preventing a sharper downturn in domestic demand.

“France is not experiencing the contraction that some feared earlier this year,” Villeroy stated. “Our economy is proving more resilient, thanks largely to solid employment and the gradual easing of inflation.”

Household consumption, which slowed through 2024, has begun to recover as real incomes improve and energy-related cost pressures fade.

Inflation Moderation Strengthens Outlook

Villeroy reiterated that inflation in France is on a clear disinflationary path, aligning with the ECB’s broader euro-area trajectory.
While core inflation remains above pre-pandemic levels, he noted that price pressures are easing across goods and, to a lesser extent, services.

“Disinflation is proceeding as expected, and in some cases slightly faster,” he said, adding that this trend is improving purchasing power and reducing uncertainty for businesses.

Businesses Showing Renewed Confidence

According to recent sentiment surveys referenced by Villeroy, French firms are increasingly optimistic about production levels and investment plans for 2026.

Key factors include:

• easing supply-chain bottlenecks,
• more predictable financing conditions,
• and stabilising export activity.

Although external demand, particularly from Germany and parts of Asia, remains subdued, France’s more diversified industrial base appears to be mitigating the impact.

Policy Implications: No Immediate Shift, but Risks Remain

Villeroy did not offer new guidance on upcoming ECB policy decisions but reaffirmed that future moves will remain data-dependent.
He reiterated that the ECB has entered a phase in which the pace of rate adjustments will be cautious and calibrated, particularly as inflation continues to slow.

However, he also warned that geopolitical tensions, energy market volatility, and weak global trade could still pose risks to France’s growth trajectory.

“Resilience does not mean immunity,” Villeroy said. “But the French economy today is stronger than many would have expected.”

Outlook: Gradual Recovery Expected Into 2026

Economists expect French GDP growth to stabilise into early 2026, supported by:

• improving household purchasing power,
• a gradual revival in corporate investment,
• and easing inflation across the euro area.

While risks remain skewed to the downside, Villeroy’s remarks underscore growing confidence that France may avoid a deeper slowdown and outperform several major European peers in the months ahead.