The French parliament approved the country’s 2025 budget on 6 February 2025, with a focus on reducing the public deficit through fiscal measures and expenditure control. According to the budgeted estimates, the country’s gross domestic product (GDP) is expected to grow by 1.1% in 2025. The budget also aims to reduce the fiscal deficit to 5% of GDP in 2025 from 6.1% of GDP in 2024. As part of the latest budget, the government announced public spending of €1.7trn ($1.8trn), representing 56.8% of GDP in 2025. To restore fiscal balance and ensure sustainable public finances, the government has outlined a €60bn recovery effort for 2025, consisting of €40bn in spending cuts (two-thirds) and €20bn from temporary tax contributions. The 2025 budget includes a net expenditure of €518.8bn, an increase of 1.2% compared to the 2024 budget’s expenditure. Some of the major allocations include €31.1bn for research and higher education, €16.8bn for the energy transition, €5.8bn for Investment under France in the 2030 long-term plan, €2.3bn for the renovation of houses into energy-efficient houses, €1.6bn for the healthcare sector, and €1.2bn for investment under the country recovery plan.
The latest budget is also expected to stimulate growth in the construction industry, as the government has outlined investments in the infrastructure and energy sectors. Through these investments, the government aims to develop critical infrastructure, including railways, roads, and metro, as well as energy and water systems. To enhance transportation infrastructure, the government has allocated €2.7bn to the French Transport Infrastructure Financing Agency for metro expansions, railway modernisation, and other sustainable mobility projects. This funding will support the construction of new transit lines, station upgrades, and improvements to existing transport networks. The Green Fund, with a budget of €1bn, will also finance projects that promote urban sustainability and energy efficiency. These investments align with France’s climate goals and aim to improve connectivity while reducing carbon emissions. For the energy sector, the government allocated €4.6bn for renewable energy, focusing on offshore wind farms, solar power installations, and biogas facilities. Additionally, the government allocated €1.1bn for water infrastructure projects to support the construction of new infrastructure to meet growing water demand and ensure a stable supply for urban and rural communities.
In the healthcare sector, the government has prioritised investments in healthcare infrastructure and service improvements. The budget has allocated €6bn for funding the Ségur de la Santé initiative, which aims to modernise healthcare facilities. Specific allocations include €32.5m for rebuilding the Futuna hospital over four years and €2.7m for the Wallis and Futuna health agency to address its financial deficit. For housing, the budget focuses on energy-efficient renovations and social housing development. The ‘MaPrimeRénov’’ programme, which supports private-sector energy renovations, received a €2.3bn budget allocation and €2.5bn in payment credits. The government is also investing in homelessness prevention, with plans to create 30,000 rental units and 10,000 family pension places by 2027.
Despite the budgetary allocation, ongoing weaknesses in the residential sector are expected to impact the output of the France construction industry in the short term. The weakness in the residential sector, which has been worsening since 2022, owing to weak investor and housing developers’ confidence, comes amid a drop in new housing permits and high interest rates. According to the country’s National Institute of Statistics and Economic Studies, the total floor area of dwelling construction fell by 15.1% year on year (YoY) in France in 2024, preceded by an annual decline of 26.7% in 2023. Leading data and analytics company GlobalData expects the French construction industry to record a decline of 1.3% in real terms in 2025, owing to several headwinds caused by high interest rates, falling building permits, and political instability in the country, coupled with labour shortages. According to Eurostat, the French construction industry’s value add fell by 2.6% YoY in 2024, preceded by an annual growth of 1.9% in 2023. Over the remainder of the forecast period, the construction industry is expected to recover and register an annual average growth rate of 2.6% between 2026 and 2029, supported by investments in the commercial, industrial, and energy sectors, coupled with the country’s targets of achieving carbon neutrality by 2050. The country plans to expand its renewable energy capacity to 175GW by 2035, with significant targets for solar (75-100GW), offshore wind (18GW), and hydropower (28GW). Growth over the forecast period will also be driven by France’s plan to build 14 new nuclear reactors by 2050, with the goal of reducing fossil fuel dependence. Additionally, the government’s €100bn investment in developing the country’s rail networks by 2040 will contribute to the industry’s growth over the forecast period.
