Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of France
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: France, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 210 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of France {SWD(2025) 210 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of France 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(2) and Article 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29  April  2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

General considerations 

(1) 

Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the 
objectives  of  the  economic  governance  framework,  which  aims  at  promoting  sound 
and  sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through reforms and investments, and preventing excessive government deficits. The 
Regulation  stipulates  that  the  Council  and  the  Commission  conduct  multilateral 
surveillance in the context of the European Semester in accordance with the objectives 
and requirements set out in the TFEU. The European Semester includes, in particular, 
the  formulation,  and  the  surveillance  of  the  implementation  of  country-specific 
recommendations.  The  Regulation  also  promotes  national  ownership  of  fiscal  policy 
and  emphasises  its  medium-term  focus,  combined  with  more  effective  and  coherent 
enforcement. Each Member State must submit to  the Council and the Commission  a 
national  medium-term  fiscal-structural  plan,  containing  its  fiscal,  reform  and 
investment  commitments,  over  4  or  5  years,  depending  on  the  length  of the  national 
legislative  term.  The  net  expenditure2  path  in  these  plans  has  to  comply  with  the 

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OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Net  expenditure  as  defined  in  Article  2,  point  (2),  of  Regulation  (EU)  2024/1263:  ‘net  expenditure’ 
means government expenditure net of (i) interest expenditure; (ii) discretionary revenue measures; (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  revenue  from  Union  funds;  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union;  (v)  cyclical  elements  of 
unemployment benefit expenditure; and (vi) one-offs and other temporary measures. 

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Regulation’s  requirements,  including  the  requirements  to  put  or  keep  general 
government debt on a plausibly downward path by the end of the adjustment period, or 
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to 
bring  and/or  maintain  the  general  government  deficit  below  the  3%-of-GDP  Treaty 
reference value over the medium term. Where a Member State commits to a relevant 
set  of  reforms  and  investments  in  accordance  with  the  criteria  set  out  in  the 
Regulation, the adjustment period may be extended by up to three years. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility  (the  ‘RRF’),  entered  into  force  on 
19 February 2021.  The  RRF  provides  financial  support  to  Member  States  for 
implementing  reforms  and  investments,  delivering  a  fiscal  impulse  financed  by  the 
Union.  In  line  with  the  priorities  of  the  European  Semester  for  economic  policy 
coordination, the RRF fosters economic and social recovery while driving sustainable 
reforms and investments, in particular promoting the green and digital transitions and 
making  Member  States’  economies  more  resilient.  It  also  helps  strengthen  public 
finances  and  boost  growth  and  job  creation  in  the  medium  and  long  term,  improve 
territorial cohesion within the Union and support the continued implementation of the 
European Pillar of Social Rights. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council4  (the 
‘REPowerEU  Regulation’),  which  was  adopted  on  27 February 2023,  aims  to  phase 
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy 
security  and  diversify  the  Union’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  France  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  28  April  2021,  France  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to Article 19 of that Regulation, the Commission assessed the relevance, effectiveness, 
efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in  accordance  with  the 
assessment guidelines set  out  in Annex V. On  13 July  2021, the Council adopted its 
Implementing Decision approving the assessment of the recovery and resilience plan 
for  France5,  which  was  amended  under  Article  18(2)  on  14  July  2023  to  update  the 
maximum  financial  contribution  for  non-repayable  financial  support,  as  well  as  to 
include  the  REPowerEU  chapter6.  The  release  of  instalments  is  conditional  on  the 
adoption  of  a  decision  by  the  Commission,  in  accordance  with  Article  24(5),  stating 
that France has satisfactorily achieved the relevant milestones and targets set out in the 
the 
Council 

Implementing  Decision.  Satisfactory  achievement 

requires 

that 

the  Recovery  and  Resilience  Facility 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
(OJ  L  57,  18.2.2021,  p.  17,  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj). 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27 February 2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa. eu/eli/reg/2023/435/oj). 
Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for France (ST 10162/21; ST 10162/21 ADD 1). 
Council Implementing Decision of 14 July 2023 amending the Implementing Decision of 13 July 2021 
the  recovery  and  resilience  plan  for  France  (ST 
the  approval  of 
on 
11150/23; ST 11150/23). 

the  assessment  of 

(2) 

(3) 

(4) 

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(5) 

(6) 

(7) 

achievement  of  preceding  milestones  and  targets  for  the  same  reform  or  investment 
has not been reversed. 

On  21  January  2025  the  Council,  upon  the  recommendation  of  the  Commission, 
adopted a recommendation endorsing the national medium-term fiscal-structural plan 
of France7.  The plan was submitted in accordance with Articles 11 and 36(1), point 
(a)  of  Regulation  (EU)  2024/1263,  covers  the  period  from  2025  until  2029  and 
presents a fiscal adjustment spread over seven years. 

On  26 November 2024,  the  Commission  adopted  an  opinion  on  the  2025  draft 
budgetary  plan  of  France.  On  the  same  date,  on  the  basis  of  Regulation  (EU)  No 
1176/2011,  the  Commission  adopted  the  2025  Alert  Mechanism  Report,  in  which  it 
did  not  identify  France as  one  of  the  Member  States  for  which  an  in-depth  review 
would  be  needed.  The  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation on the economic policy of the euro area and a proposal for the 2025 
Joint  Employment  Report,  which  analyses  the  implementation  of  the  Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights.  The  Council 
adopted  the  Recommendation  on  the  economic  policy  of  the  euro  area8  on  13  May 
2025 and the Joint Employment Report on 10 March 2025.  

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic framework that aims to boost the EU’s global competitiveness over the next 
five  years.  It  identifies  the  three  transformative  imperatives  of  sustainable  economic 
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To 
close  the  innovation  gap,  the  EU  aims  to  foster  industrial  innovation,  support  the 
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and 
promote the adoption of advanced technologies like artificial intelligence and quantum 
computing.  In  pursuit  of  a  greener  economy,  the  Commission  has  outlined  a 
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring 
that  the  shift  to  clean  energy  remains  cost-effective,  competitiveness-friendly, 
particularly  for  energy-intensive  sectors,  and  is  a  driver  for  growth.  To  reduce 
excessive dependencies and increase security, the Union is committed to strengthening 
global  trade  partnerships,  diversifying  supply  chains  and  securing  access  to  critical 
raw materials and clean energy sources. These priorities are underpinned by horizontal 
enablers, namely regulatory simplification, deepening of the single market, financing 
competitiveness and a Savings and Investments Union, promotion of skills and quality 
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned 
with  the  European  Semester,  ensuring  that  Member  States’  economic  policies  are 
consistent with the Commission’s strategic objectives, creating a unified approach to 
economic governance that fosters sustainable growth, innovation and resilience across 
the Union. 

(8) 

In  2025,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  implementation  of  the  RRF.  The  full  implementation  of  the 
recovery and resilience plans remains essential for delivering on the policy priorities 
under the European Semester, as the plans help effectively address all or a significant 
subset  of  challenges  identified  in  the  relevant  country-specific  recommendations 

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8 

Council  Recommendation  of  21  January  2025  endorsing  the  medium-term  fiscal-structural  plan  of 
France, OJ C/2025/659, 10.2.2025. 
Council  Recommendation  of  13  May  2025  on  the  economic  policy  of  the  euro  area  (OJ  C, 
C/2025/2782, 22.5.2025, ELI: http://data.europa.eu/eli/C/2025/2782/oj). 

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issued  in  recent  years.  These  country-specific  recommendations  remain  equally 
relevant  for  the  assessment  of  amended  recovery  and  resilience  plans  in  accordance 
with Article 21 of Regulation (EU) 2021/241.   

(9) 

The  2025  country-specific  recommendations  cover 
the  key  economic  policy 
challenges that are not sufficiently addressed by measures included in the recovery and 
resilience  plans,  taking  into  account  the  relevant  challenges  identified  in  the  2019-
2024 country-specific recommendations. 

in 

(10)  On  4  June  2025,  the  Commission  published  the  2025  country  report  for  France.  It 
assessed  France’s  progress 
country-specific 
recommendations  and  took  stock  of  France’s  implementation  of  the  recovery  and 
resilience plan. Based on this analysis, the country report identified the most pressing 
challenges  France  is  facing.  It  also  assessed  France’s  progress  in  implementing  the 
European  Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on 
employment, skills and poverty reduction, as well as progress in achieving the United 
Nations Sustainable Development Goals.  

addressing 

relevant 

the 

Assessment of the Annual Progress Report 

(11)  On 21 January 2025 the Council recommended the following maximum growth rates 
of  net  expenditure  for  France:  0.8%  in  2025,  1.2%  in  2026,  1.2%  in  2027,  1.2%  in 
2028 and 1.1% in 2029, which corresponds to the maximum cumulative growth rates 
calculated by reference to 2023 of 4.6% in 2025, 5.8% in 2026, 7.1% in 2027, 8.4% in 
2028 and 9.5% in 2029. In 2025-2029, these maximum growth rates of net expenditure 
coincide  with  the  corrective  path  in  accordance  with  Article  3(4)  of  Regulation 
1467/97, as recommended by the Council on 21 January 2025 with a view to bringing 
an end to the situation of an excessive deficit9. On 30 April 2025 France submitted its 
Annual Progress Report 10, on action taken in response to the Council recommendation 
of  21  January  2025  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive 
deficit,  the  implementation  of  the  set  of  reforms  and  investments  underpinning  the 
extension of the adjustment period and the implementation of reforms and investments 
responding  to  the  main  challenges  identified  in  the  European  Semester  country-
specific recommendations. The Annual Progress Report also reflects France's biannual 
reporting  on  the  progress  made  in  achieving  its  recovery  and  resilience  plan  in 
accordance with Article 27 of Regulation (EU) 2021/241. 

(12)  Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  recommended  to 
activate the national  escape clause of the Stability and Growth Pact  in  a coordinated 
manner to support the EU efforts to achieve a rapid and significant increase in defence 
spending and this proposal was welcomed by the European Council of 6 March 2025. 

(13)  Based on data validated  by Eurostat11, France's general  government  deficit increased 
from 5.4% of GDP in 2023 to 5.8% in 2024, while the general government debt rose 
from 109.8% of GDP at the end of 2023 to 113.0% at the end of 2024. According to 
the  Commission's  calculations,  these  developments  correspond  to  a  net  expenditure 
growth  rate  of  3.1%  in  2024.  In  the  2025  Annual  Progress  Report,  France  estimates 

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Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
France, C/2025/5033/1. 
The  2025  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en 
Eurostat-Euro Indicators, 22.4.2025. 

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the net expenditure growth in 2024 at 3.3%. Based on the Commission's estimates, the 
fiscal  stance12,  which  includes  both  nationally  and  EU  financed  expenditure,  was 
broadly neutral in 2024. 

(14)  According to the Annual Progress Report, the macroeconomic scenario underpinning 
the  budgetary  projections  by  France  expects  real  GDP  growth  at  0.7%  in  2025  and 
1.2%  in  202613,  while  CPI  inflation  is  projected  at  1.4%  in  2025.  The  Commission 
Spring 2025 Forecast projects real GDP to grow by 0.6% in 2025 and 1.3% in 2026, 
and HICP inflation to stand at 0.9% in 2025 and 1.2% in 2026. 

(15) 

In the Annual Progress Report, the general government deficit is expected to decrease 
to  5.4%  of  GDP  in  2025,  while  the  general  government  debt-to-GDP  ratio  is  set  to 
increase  to  116.2%  by  the  end  of  2025.  These  developments  correspond  to  net 
expenditure growth of 0.9% in 2025.The Commission Spring 2025 Forecast projects a 
general  government  deficit  of  5.6%  of  GDP  in  2025.  The  decrease  of  the  deficit  in 
2025 mainly reflects the impact of revenue-increasing measures estimated to amount 
to  around  0.5%  of  GDP,  along  with  expenditure-decreasing  measures,  mostly  on 
public consumption and social transfers, worth almost 0.3% of GDP. These more than 
offset the projected higher unemployment benefit expenditure and increasing interest 
payments  on  government  debt.  According  to  the  Commission's  calculations,  these 
developments  correspond  to  net  expenditure  growth  of  0.9%  in  2025.  Based  on  the 
Commission's  estimates,  the  fiscal  stance,  which  includes  both  nationally  and  EU 
financed expenditure, is projected to be contractionary, by 0.9% of GDP, in 2025. The 
general government debt-to-GDP ratio is set to increase to 116.0% by the end of 2025. 
The  increase  of  the  debt-to-GDP  ratio  in  2025  mainly  reflects  the  projected  high 
primary deficit. 

(16)  General  government  expenditure  amounting  to  0.1%  of  GDP  is  expected  to  be 
financed  by  non-repayable  support  (“grants”)  from  the  Recovery  and  Resilience 
Facility  in  2025,  compared  to  0.1%  of  GDP  in  2024,  according  to  the  Commission 
Spring 2025 Forecast. Expenditure financed by Recovery and Resilience Facility non-
repayable support enables high-quality investment and productivity-enhancing reforms 
without a direct impact on the general government balance and debt of France. 

(17)  General  government  defence  expenditure  in  France  amounted  to  1.7%  of  GDP  in 
2021,  1.8%  of  GDP  in  2022  and  1.8%  of  GDP  in  202314.  According  to  the 
Commission  Spring  2025  Forecast,  expenditure  on  defence  is  projected  at  1.9%  of 
GDP in both 2024 and 2025. This corresponds to an increase of 0.2 percentage points 
of GDP compared to 2021. 

(18)  According  to  the  Commission  Spring  2025  Forecast,  net  expenditure  in  France  is 
projected to grow by 0.9% in 2025 and 4.1% cumulatively in 2024 and 2025. Based on 
the Commission Spring 2025 Forecast, the net expenditure growth of France in 2025 is 
projected  to  be  above  the  recommended  maximum  growth  rate  established  by  the 

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The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
In all years, GDP growth reported in the Annual Progress Report is seasonally- and calendar-adjusted. 
Eurostat, government expenditure by classification of functions of government (COFOG).  

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(19) 

corrective path, corresponding to a deviation15 of 0.1% of GDP in annual terms. The 
projected  deviation  does  not  exceed  the  0.3%  of  GDP  threshold  for  the  annual 
deviation, beyond which there would be a strong presumption of no effective action. 
When  considering  2024  and  2025  together,  the  cumulative  growth  rate  of  net 
expenditure  is  projected  to  be  below  the  recommended  maximum  growth  rate. 
Therefore, the excessive deficit procedure for France is held in abeyance. At the same 
time,  France  is  invited  to  stand  ready  to  take  further  measures  to  comply  with  the 
corrective path. A more complete assessment will be carried out when outturn data are 
available.  

In the Annual Progress Report, the general government deficit is projected to decrease 
to 4.6% of GDP in 2026, while the general government debt-to-GDP ratio is projected 
to increase to 117.6% by the end of 2026. After 2026, in the Annual Progress Report, 
the general government deficit is projected to decrease gradually, to 4.1% of GDP in 
2027, 3.4% of GDP in 2028, and 2.8% of GDP in 2029. In turn, after 2026, the general 
government debt-to-GDP ratio is projected to increase to 118.1% of GDP in 2027, and 
then to decrease gradually, to 117.8% in 2028, and 117.2% in 2029. Based on policy 
measures  known  at  the  cut-off  date  of  the  forecast,  the  Commission  Spring  2025 
Forecast  projects  a government  deficit of 5.7% of GDP in  2026. The increase of the 
deficit  in  2026  mainly  reflects  the  no-policy  change  assumption  and  rising  interest 
payments  on  government  debt.  These  developments  correspond  to  net  expenditure 
growth  of  2.5%  in  2026.  Based  on  the  Commission's  estimates,  the  fiscal  stance, 
which  includes  both  nationally  and  EU  financed  expenditure,  is  projected  to  be 
broadly neutral in 2026. The general government debt-to-GDP ratio is projected by the 
Commission  to  increase  to  118.4%  by  the  end  of  2026.  The  increase  of  the  debt-to-
GDP ratio in 2026 mainly reflects the projected high primary deficit. 

(20)  The  recommendation  endorsing  the  medium-term  fiscal-structural  plan  of  France 
specifies  the  set  of  reforms  and  investments  underpinning  the  extension  of  the 
adjustment  period,  together  with  a  timeline  for  their  implementation.  They  include 
existing  and  stepped-up  measures  from  the  recovery  and  resilience  plan,  such  as 
reinforcing spending reviews, reforms for accelerating renewable energy production, a 
reform  of  unemployment  insurance  and  an  increase  in  public  research  spending,  as 
well as additional reforms and investments such as the rationalisation of tax and social 
expenditures,  the  reform  of  the  general  reductions  in  social  security  contributions, 
reforms  to  simplify the  business  environment  and to  facilitate the decarbonisation of 
industry.  Taking  into  account  the  information  provided  by  France  in  its  Annual 
Progress Report, the Commission finds that the reforms and investments underpinning 
an  extension  that  were  due  by  the  30  April  2025  have  been  implemented  with  the 
exception  of  the  reform  of  the  general  reductions  in  social  security  contributions 
relative  to  the  minimum  wage  (SMIC),  which  delivered  slightly  lower  savings  than 
committed. 

(21)  Tax  expenditures  in  France  are  numerous  and  create  a  heavy  budgetary  burden.  The 
467 tax expenditures in  the draft budget for 2024 are estimated to have amounted to 
EUR 83.3 billion (2.9% of GDP), representing about a quarter of total revenues of the 
state.  According  to  the  French  Court  of  Auditors,  the  final  budgetary  cost  of  tax 
expenditures in 2024 implies a slippage of EUR 4.55 billion compared to their initial 
estimated  cost,  which  de  facto  extends  their  upward  trend  in  real  terms  since  2013 

15 

From  2026  these  figures  will  appear  in  the  control  account  that  is  established  in  Article  22  of  the 
Regulation (EU) 2024/1263. 

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despite many attempts to control their cost and number. Moreover, the aforementioned 
cost does not include tax expenditures related to the value added tax devolved to local 
governments  and  social  security  administrations.  The  largest  tax  expenditures 
according to their budgetary impact in the 2024 budget law are the research tax credit 
(crédit d'impôt en faveur de la recherche, EUR 7.9 billion), the tax credit for domestic 
employees (crédit d’impôt pour l'emploi d'un salarié à domicile, EUR 6.7 billion), the 
10% allowance on pensions and retirement arrangements (abattement de 10 % sur les 
pensions et retraites, EUR 4.8 billion), the exemption of sums paid for participation of 
salaries  in  firm’s  profits,  sharing  of  capital  gains,  employee  savings  plans  and 
retirement  saving  plans  (EUR  2.8  billion)  and  the  10%  rate  for  improvement, 
conversion,  fitting-out  and  maintenance  works  (taux  de  10  %  pour  les  travaux 
d’amélioration,  de  transformation,  d’aménagement  et  d’entretien,  EUR  2.2  billion). 
By contrast, there are numerous tax expenditures that entail limited individual benefits 
while creating a sizeable overall budgetary burden, whereas in other cases, the number 
of beneficiaries is unknown, which hampers their full control. Tax expenditures reduce 
the  efficiency  and  transparency  of  the  French  tax  system,  introduce  a  significant 
degree of complexity and, more broadly, induce allocative efficiency losses due to the 
distortion  of  individual  decisions.  The  multiannual  public  finance  programming  law 
for 2023-2027, adopted in November 2023, introduced specific provisions to limit the 
budgetary  impact  of  tax  expenditures,  control  their  number  and  make  them  more 
efficient,  while  also  aiming  to  improve  the  transparency  of  communication  to 
parliament  in  the  annual  budgetary  process.  However,  past  attempts  have  shown 
limited success in reducing tax complexity and the budgetary cost associated with tax 
expenditures. 

(22)  At 57.1% of GDP in 2024, France’s public expenditure remained among the highest in 
the  EU,  and  7.5  percentage  points  above  the  EU  average.  The  Commission  2025 
spring forecast projects a similar gap in 2025 and 2026. Hence, fiscal consolidation in 
France calls for decisive action on public spending. The spending review mechanism 
adopted with the 2023 budget law, as part of the recovery and resilience plan, aims to 
conduct  regular  evaluations  to  identify  the  most  efficient  expenditures  favouring 
growth,  social inclusion and the green and digital transitions,  while supporting fiscal 
consolidation  by  attaining  expenditure  savings  where  inefficiencies  are  detected.  As 
part of its medium-term fiscal-structural plan and to underpin an extension of the fiscal 
adjustment period, France committed to implement a number of measures addressing 
this  challenge.  According  to  the  French  Annual  Progress  Report,  the  expenditure 
reviews  carried  out  in  2024  identified  and  generated  savings  estimated  at  EUR  4.3 
billion  in  the  2025  budget  law,  which  would  imply  a  substantial  progress  towards 
achieving the objective in the French medium-term fiscal-structural plan of cumulative 
permanent  savings  of  EUR  8  billion  over  2025-2027.  Going  forward,  fiscal 
consolidation would benefit from further regular integration of quantified expenditure 
saving  targets  from  spending  reviews  into  future  annual  and  multiannual  budgetary 
planning.   

Key policy challenges 

(23) 

In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 
2.2  of  Annex  V  to  that  Regulation,  the  recovery  and  resilience  plan  includes  an 
extensive set  of mutually reinforcing  reforms and investments  to  be implemented by 
2026.  These  are  expected  to  help  effectively  address  all  or  a  significant  subset  of 
challenges  identified  in  the  relevant  country-specific  recommendations.  Within  this 
tight timeframe, finalising the effective implementation of the recovery and resilience 

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plan  including  the  REPowerEU  chapter,  is  essential  to  boost  France’s  long-term 
competitiveness  through  the  green  and  digital  transitions,  while  ensuring  social 
fairness. The systematic involvement of local and regional authorities, social partners, 
civil society and other relevant stakeholders remains essential in order to ensure broad 
ownership for the successful implementation of the recovery and resilience plan. 

(24)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF) 
and the European Social Fund Plus (ESF+), has accelerated in France. It is important 
to  continue  efforts  to  ensure  the  swift  implementation  of  these  programmes,  while 
maximising  their  impact  on  the  ground.  France  is  already  taking  action  under  its 
cohesion policy programmes to boost competitiveness and growth. At the same time, 
France  continues  to  face  challenges,  including  the  need  to  better  capitalise  on 
industrial opportunities offered  by the green and digital transitions, challenges related 
to  housing,  particularly  in  deprived  neighbourhoods  in  urban  areas  and  the  need  to 
improve  access  to  clean  water  and  sanitation,  particularly  in  the  outermost  regions, 
especially  in  Mayotte.  Furthermore,  to  enhance  social  resilience,  particular  attention 
needs to be paid to investing in upskilling and reskilling to meet labour market needs, 
focusing  on  the  most  disadvantaged  groups,  and  reinforcing  anti-poverty  and  social 
inclusion measures, with particular attention to children. In accordance with Article 18 
of Regulation (EU) 2021/1060, France is required – as part of the mid-term review of 
the  cohesion  policy  funds  –  to  review  each  programme  taking  into  account,  among 
other things, the challenges identified in the 2024 country-specific recommendations. 
The  Commission  proposals  adopted  on  1  April  202516  extend  the  deadline  for 
submitting  an  assessment  –  for  each  programme  –  of  the  outcome  of  the  mid-term 
review  beyond  31  March  2025.  It  also  provides  flexibilities  to  help  speed  up 
programme  implementation  and  incentives  for  Member  States  to  allocate  cohesion 
policy resources to five strategic priority areas of the Union, namely competitiveness 
in strategic technologies, defence, housing, water resilience and energy transition. 

(25)  The  Strategic  Technologies  for  Europe  Platform  (STEP)  provides  the  opportunity  to 
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP 
is channelled through 11 existing EU funds. Member States can also contribute to the 
InvestEU programme supporting investments in priority areas. France could use these 
initiatives  to  support  the  development  or  manufacturing  of  critical  technologies, 
including clean and resource-efficient technologies. 

(26)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  France  faces  several  additional  challenges  related  to 
regulatory  and  administrative  burden,  intensity  of  business  R&D,  effectiveness  of 
business-academia  collaboration,  digitalisation  of  small  to  medium-sized  enterprises 
(SMEs), the decarbonisation of transport and buildings, the roll-out of renewables and 
related  investments  in  the  electricity  grid  and  storage,  skills  shortages,  the  education 
system, the teaching profession and child poverty.  

(27)  As  set  in  the  Competitiveness  Compass,  all  the  EU,  national,  and  local  institutions 
must  make  a  major  effort  to  produce  simpler  rules  and  to  accelerate  the  speed  of 
administrative  procedures.  The  Commission  has  set  ambitious  goals  for  reducing 

16 

Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review - COM(2025) 123 final. 

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administrative burden: by at least 25% and by at least 35% for SMEs; and has created 
new  tools  to  achieve  these  goals,  including  systematic  stress  test  of  the  stock  of  EU 
legislation and enhanced stakeholders’ dialogue. To match this ambition, France also 
needs  to  take  action.  84%  of  businesses  consider  the  complexity  of  administrative 
procedures to be a problem for their company when doing business in France17. France 
has  adopted  several  reforms  aiming  to  reduce  administrative  burden18  and  accelerate 
public  action19.  These  efforts  have  potentially  contributed  to  a  reduction  in  the 
perception  that  business  regulations  pose  a  long-term  barrier  to  investment  as 
indicated by the decline in firms considering regulations a major obstacle (from 25% 
in  2019  and  22%  in  2020  to  19.7%  in  2024).  Furthermore,  France  has  improved  its 
standing  relative  to  the  EU  average  since  201920.  As  part  of  its  medium-term  fiscal-
-structural  plan  and  to  underpin  an  extension  of  the  fiscal  adjustment  period,  France 
committed  to  implement  a  number  of  reforms  addressing  this  challenge.  However, 
they  would  not  fully  address  the  challenge  of  regulatory  and  administrative  burden. 
According  to  the  Commission’s  assessment21  and  the  OECD’s  2023  Product  Market 
Regulation  indicators,  for  retail  and  business  services,  many  of  which  are  regulated 
professions,  regulatory  restrictions  remain  higher  in  France  compared  to  other 
Member  States.  Redesigning  requirements  for  accessing  and  exercising  service 
activities would stimulate innovation, competition and professional mobility, resulting 
in  a  positive  overall  economic  impact22.  Easing  restrictions  on  retail  –  such  as 
registration requirements, authorisations and operational constraints including on sales 
– could help improve business operations and benefit consumers through competitive 
prices  and  a  broader  product  choice.  The  overall  licensing  and  permitting  system, 
while  less  burdensome  than  the  EU  average,  could  be  further  improved  by  adopting 
best  practices,  including  regular  reviews  of  permits  and  licences  to  assess  their 
necessity. 

(28)  While  France  has  the  highest  share  of  public  support  for  business  R&D23  in  the  EU 
(more than twice the EU average both for total public support and for its component of 
tax incentives), France’s business R&D intensity is stagnating and remained somewhat 
below  the  EU  average  in  2023.  In  particular,  a  costly  tax  credit  on  research 
in  place,  although  evaluations  revealed  major 
(EUR 7.9 billion 
weaknesses24. Notably, the evaluation conducted by the National Commission for the 
Evaluation of Innovation Policies in 2021 indicated that the scheme had no significant 
effects  on  larger  firms,  despite  half  of  the  support  being  transferred  to  them.  As 
recommended  by  the  General  Inspectorate  of  Finance  (Inspection  Générale  des 

in  2024) 

is 

17 
18 
19 
20 

21 
22 

23 

24 

Businesses’ attitudes towards corruption in the EU, Flash Report, Eurobarometer Report (April 2024). 
Law of 22 May 2019 for the growth and transformation of businesses (Pacte). 
Law of 7 December 2020 for the acceleration and simplification of public action (ASAP). 
European  Investment  Bank,  EIB  Investment  Survey  2024.  For  the  EU,  an  arithmetic  average  is 
computed.  
European Commission, Retail restrictiveness indicator (2022 update), 2024. 
Upcoming assessment by the French competition authority  of the reforms related to the conditions of 
establishment and tariffs of regulated legal professions is expected in summer 2025. 
France’s public support for business R&D was at 0.45% of GDP in 2021, compared to the EU average 
of  0.2%.  In  2021,  R&D  tax  incentives  amounted  to  foregone  revenues  of  0.28%  of  GDP  in  France, 
compared to the EU average of 0.1%. France’s business R&D intensity stood at 1.44% in 2023 (at the 
same level as in 2012), below the EU average (1.49%). 
OECD  (2020),  'How  effective  are  R&D  tax  incentives?  New  evidence  from  the  OECD  microBeRD 
project', Directorate for Science, Technology and Innovation Policy Note, OECD, Paris.  
Conseil  d'analyse  économique  (2022),  Focus  N°090-2022  'Renforcer  l'impact  du  Crédit  d'impôt 
recherche' Philippe Aghion, Nicolas Chanut et Xavier Jaravel. 

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Finances) in March 202425, in the 2025 budget law, the research tax credit scheme was 
refocused somewhat on R&D expenditure, namely by excluding expenditure linked to 
technology  watch  and  intellectual  property  from  the  eligible  expenditure  base.  Also, 
doubling of the tax base for the hiring of post-doctoral researchers under the scheme 
was  discontinued.  While  these  measures  should  lead  to  some  savings26  (estimated  at 
5%  of  the  annual  tax  expenditure  of  this  tax  credit),  they  are  not  expected  to 
significantly increase business R&D outcomes, as they only marginally alter the scope 
of  the  scheme.  Allocating  a  larger  share  of  the  aid  to  innovative  SMEs,  mid-cap 
companies and start-ups and facilitating their uptake of the scheme27 could boost R&D 
efforts, since those firms are more financially constrained. Other existing measures to 
support  innovation  include,  in  particular,  the  innovation  tax  credit  and  the  status  of 
young  innovative  companies  (Jeunes  Entreprises  Innovantes),  which  provides  social 
and fiscal benefits for start-ups that meet specific R&D intensity and growth criteria. 
They  better  target  SMEs,  but  have  a  much  smaller  budget  (around  EUR 332 million 
for the innovation  tax  credit and EUR 314 million  for  the  tax and social  expenditure 
benefiting young innovative companies28 in 2024). The benefits accruing from access 
to those more targeted measures were reduced more significantly relative to their size 
than  the  research  tax  credit,  pursuant  to  the  amendments  introduced  by  the  2025 
budget law and the Social Security Financing Law for 2025.  

(29)  Closer  links  between  science  and  business,  particularly  through  knowledge  and 
technology  transfer  schemes,  are  key  for  generating  innovation.  However,  the 
complexity  of  France’s  technology  transfer  and  research  valorisation  ecosystem,  as 
highlighted  in  the  2019  evaluation  report  on  the  ‘Investments  for  the  future’ 
programme, represents a significant barrier. France scores significantly below the EU 
average  for  public  R&D  financed  by  businesses,  a  situation  that  has  not  improved 
since 2019. The ecosystem’s strong segmentation and the suboptimal performance of 
key actors such as technology transfer acceleration companies (Sociétés d'accélération 
du transfert de technologies, SATT), institutes for technological research (Instituts de 
Recherche  Technologique),  and  university  hospital  institutes  (Instituts  Hopitalo-
Universitaires)  are  areas  of  concern29.  However,  since  2019,  no  major  reform  of  the 
SATT  model  has  been  carried  out.  More  recently,  the  university  innovation  hubs 
(pôles  universitaires  d’innovation)  initiative  was  introduced  in  2023  to  strengthen 

25 

26 

27 

28 

29 

The General Inspectorate of Finance. Expenditure review: support to businesses, March 2024, available 
at: 
https://www.igf.finances.gouv.fr/files/live/sites/igf/files/contributed/Rapports%20de%20mission/2024/
2023-M-105-03%20Rapport%20Aides%20aux%20entreprises.pdf  
Savings are estimated at 5% (General Report No. 144 (2024-2025), Volume II, Booklet 1, deposited on 
November  21,  2024  available  at:  Projet  de  loi  de  finances  pour  2025:  Les  conditions  générales  de 
l'équilibre financier (article liminaire et première partie de la loi de finances) - Sénat). 
 Lignau (DGE, 2024) reported that among the start-ups created since 2016, only 44% benefited from the 
research  tax  credit  scheme  in  2017-2021,  although  they  used  it  more  than  other  schemes  such  as  the  
young innovative company status or the innovation tax credit. 
2024 Finance Bill: Research and Higher Education Legislative Reports. General Report No. 128 (2023-
2024), Volume III, Annex 24, deposited on November 23, 2023, available at: Projet de loi de finances 
pour 2024: Recherche et enseignement supérieur - Sénat. 
See also the State of Higher Education, Research, and Innovation in  France 2024, No. 17, June 2024, 
topic  No.  23,  available  at:  Les  jeunes  entreprises  innovantes  -  état de  l'Enseignement  supérieur,  de  la 
Recherche et de l'Innovation en France n°17. 
Monitoring  Committee  for  Investments  for  the  Future.  Evaluation  of  the  First  Wave  of  the  Future 
Investment Program (PIA, 2009-2019), November 2019, available at: Le PIA, un outil à préserver, une 
ambition à refonder. 

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local  innovation  ecosystems,  building  on  existing  organisations  and  schemes.  To 
improve  innovation  outcomes,  the  effectiveness  of  the  knowledge  and  technology 
transfer ecosystem needs to be increased. This can be achieved by targeting concrete 
results,  such  as  a  sizeable  increase  in  patent  filings,  intellectual  property  protection, 
and  business  creation.  Simplifying  the  ecosystem,  for  instance  by  streamlining  the 
roles  of  existing  entities  or  boosting  collaboration  between  them,  could  also  yield 
better outcomes. 

(30)  While  integrating  digital  technologies  should  enable  companies  to  improve  their 
products and services, and boost competitiveness, French SMEs continue to lag behind 
in  terms  of digitalisation, with  only  68.5%  of them  achieving  a basic level  of digital 
intensity in 2024, below the EU average of 72.9%. This gap is also significant in light 
of the EU’s Digital Decade target of 90% by 2030. For instance, the share of French 
SMEs making e-sales is lower than the EU average (17.6% and 23.1%, respectively), 
which contrasts with a significantly higher share of French consumers buying goods or 
services online, across all age groups, compared to the EU average. Furthermore, the 
adoption of advanced digital technologies, such as artificial intelligence (AI) and cloud 
services  among  French  businesses,  particularly  SMEs,  trails  behind  the  EU  average. 
The EU target of 75% companies using cloud services, performing big data analysis or 
using AI appears far out of reach given the current uptake rates. In September 2018, 
France  put  in  place  the  digital  transformation  plan  focused  on  industry  covering 
measures  until  2023  and  amounting  to  EUR 1.3 billion,  including  a  subsidy  for  the 
adoption  of  new  advanced  digital  technologies  by  industrial  SMEs  and  mid-cap 
companies  financed  under  the  EU  Recovery  and  Resilience  Facility30.  France  Num, 
the key public initiative for the digital transformation of SMEs, was  created in  2018 
and  has  been  strengthened  since.  It  provides  diagnostics  and  training,  and  lists  a 
network  of  partners  willing  to  support  businesses  in  their  digitalisation  efforts. 
However, its role as a mere intermediary – connecting businesses with digital solution 
providers  and  acting  as  a  documentation  centre  –  limits  its  ability  to  directly  impact 
the  digitalisation  of  SMEs.  Moreover,  the  existence  of  over  100  different  territorial 
financial aids with different eligibility criteria and the multitude of relevant authorities 
complicates  the  landscape  for  SMEs  seeking  support31.  Further  improving  the 
effectiveness of public support for digitalisation is warranted. It would be beneficial to 
streamline available support schemes and better align the type of support with business 
needs while favouring technologies most likely to boost productivity growth32, such as 
AI. Additionally, introducing a quality rating for listed digital solution providers in the 
network  of  France  Num,  possibly  based  on  user  feedback,  could  help  SMEs  make 
informed decisions.     

(31)  Aside  from  the  COVID-19  period  –  during  which  greenhouse  gas  (GHG)  emissions 
fell artificially – France had been steadily reducing its GHG emissions in gross terms 
by  more  than  3%  per  year  since  2019.  This  downward  trend  enabled  the  country  to 
meet  its  second  carbon  budget  (2019-2023),  as  set  out  in  the  second  national  low-

30 

31 

32 

Direction Générale des Entreprises (2024). La numérisation des entreprises industrielles en France : un 
soutien à la demande et à l’offre de solutions technologiques. Les Thémas de la DGE n°24. November, 
page 8. 
Senate,  extraordinary  session  2018-2019,  Information  report  made  on  behalf  of  the  delegation  of 
businesses on the support for the digital transition of SMEs: how can France catch up on its delay?, by 
Ms. Pascale Gruny (Senator), available at:  Projet de loi de finances pour 2021: Économie - Sénat. 
Rapport  CNP  (2025)  |  Un  monde  en  mutation  –  Productivité,  compétitivité  et  transition  numérique, 
page 188.  

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carbon strategy, which aims to achieve a 40% reduction by 2030 (compared to 1990). 
Between 2022 and 2023, France even accelerated its decarbonisation efforts, achieving 
a  5.8%  drop  in  gross  emissions.  However,  this  momentum  slowed  significantly  in 
2024: according to Citepa33 estimates, emissions fell by 1.8%, reaching 366 MtCO2-eq, 
well  short  of  the  annual  decrease  needed  to  achieve  its  climate  ambition.  To  stay 
aligned with the next carbon budget (2024-2028) under the third low-carbon strategy 
(SNBC-3),  which  supports  France’s  2030  target  of  halving  gross  GHG  emissions, 
France must reduce its emissions by 5% annually until 2030. While the energy sector 
and  industry  are  maintaining  their  emissions  reduction  trajectory,  the  transport  and 
building  sectors  require  additional  efforts  to  meet  the  third  carbon  budget  under 
SNBC-3. Transport remains the main source of GHG emissions34 in France and is the 
only sector whose emissions increased between 1990 and 2023. In 2024, according to 
the  most  recent  estimates  of  Citepa,  GHG  emissions  from  the  transport  sector 
decreased by less than 1% compared to 2023. Accelerating the decarbonisation of road 
transport,  in  particular,  which  represents  a  very  significant  share  of  total  transport 
emissions35,  is  essential  to  meet  emissions  reduction  targets,  both  for  passenger  and 
freight  transport.  Adequate  incentives  and  support  schemes,  together  with  the 
deployment  of  the  necessary  infrastructure,  are  needed  so  that  the  share  of  zero-
emission  vehicles  continues  to  increase  at  pace,  with  a  specific  focus  on  vulnerable 
transport  users36  and  on  heavy-duty  vehicles.  Freight  transport  in  France  remains 
largely road based (85%) with rail and inland waterways accounting for only 10% and 
2% respectively, below the EU averages37. To support a modal shift from road to rail 
and  inland  waterways,  France  needs  to  complete  the  Trans-European  Transport 
Network (TEN-T) to increase capacity and network density. Accelerating deployment 
of the European Rail Traffic Management System, currently operational on just 10% 
of  its  core  TEN-T  network38,  would  also  improve  interoperability,  efficiency  and 
safety  of  the  EU  railway  system.  Inland  waterways  also  offer  high  decarbonisation 
potential  and  could  be  tapped  further  by  improving  river  information  services’ 
interoperability, data availability, and terminal density.  

(32)  The residential sector’s final energy consumption has been stagnating since 2015, and 
GHG emissions of residential  and tertiary buildings have decreased by 1.1% only  in 
2024 compared to 2023, according to the most recent estimates (by Citepa). France is 
experiencing delays in the pace of energy renovation of buildings and the replacement 
of oil and gas boilers with cleaner solutions such as heat pumps, compared to national 
plans39.  France  needs  to  step  up  its  efforts  to  close  the  gap  to  achieve  a  meaningful 

33 

34 

35 

36 

37 
38 
39 

Citepa  (Centre  Interprofessionnel  Technique  d'Études  de  la  Pollution  Atmosphérique)  is  the  French 
organisation mandated to produce the national greenhouse gas and air pollution inventories submitted to 
the UN and EU. 
Representing 34% of total emissions (excluding international bunkers such as international aviation and 
shipping). 
In  2023,  it  accounted  for  94%  transport  sector  emissions,  excluding  international  bunkers  such  as 
international aviation and shipping (Livre | Chiffres clés du climat 2024, page 56).  
As  defined  in  Regulation  (EU)  2023/955  of  the  European  Parliament  and  of  the  Council  of  10  May 
2023  establishing  a  Social  Climate  Fund  and  amending  Regulation  (EU)  2021/1060,  that  is  transport 
users who spend a larger part of their income on energy and transport, who, in certain regions, do not 
have access to alternative, affordable mobility and transport solutions, and who may lack the financial 
capacity to invest in the reduction of fossil fuel consumption. 
In the EU, freight transport by rail accounted for 16.6% and by inland waterways for 4.9% in 2022.  
In contrast, for instance, with Belgium (at 79%) and Spain (27%). 
As  pointed  out  by  the  General  Secretariat  of  Ecological  Planning  (SGPE)  in  December  2024,  (Les 
Rencontres avec les partenaires du SGPE, December 2024, page 11). 

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(33) 

contribution to its 2030 reduction target for energy consumption of buildings, in line 
with  the  SNBC-3.  To  support  energy  renovation  demand,  it  would  be  beneficial  to 
both streamline national schemes and stabilise their funding, including by leveraging 
private financing, paying particular attention to the most vulnerable households and to 
deep renovations.  
In 2023, France was still below its 2020 binding renewable energy target40. As part of 
its  medium-term  fiscal-structural  plan  and  to  underpin  an  extension  of  the  fiscal 
adjustment period, France committed to implement a reform addressing this challenge. 
However,  the  relevant  commitments  would  not  fully  address  it.  In  particular,  while 
previously  France  had  set  a  target  for  renewable  energy  for  2030  in  the  Energy-
Climate  Law  of  2019,  it  now  lacks  a  firm  updated  commitment  to  comply  with  the 
current EU 2030 targets. Combined with delays in implementing new permitting rules, 
this  situation  creates  uncertainty  for  investors.  Conversely,  providing  such  certainty 
would attract new investments, stimulate local job creation and boost green technology 
production,  which  would  contribute  to  a  thriving  French  market.  France  needs  to 
accelerate the permit granting process and adopt several implementing acts under the 
French Renewable Energy Acceleration Law. The process of designating ‘renewables 
acceleration  areas’ is slow: roughly two years after its adoption  (by July  2024), only 
34%  of  municipalities  had  designated  ‘renewables  acceleration  areas’.  Ensuring 
adequate  staffing  of  authorising  administrations  could  accelerate  this  process. 
Furthermore, there is still a need for clear and shorter deadlines for projects outside the 
‘renewables  acceleration  areas’,  as  well  as  the  introduction  of  one-stop  shops  for 
renewable energy permitting.  

(34)  The increasing curtailment of renewables and negative price occurrences in 2023 and 
2024 point to the constraints on electricity grids and the increased need for demand-
side  flexibility  and  storage41,  including  thermal  storage.  Further  deployment  of  such 
flexibility  solutions  is  necessary  to  integrate  increased  volumes  of  renewable  energy 
into the grid  and ensure  security of  energy supply.  Electricity system  operators RTE 
and Enedis have recently announced major investment plans to develop the grid over 
the  next  15  years42.  However,  RTE’s  plan  is  still  in  its  consultation  phase.  In  recent 
years,  France  has  commissioned  interconnection  projects  with  Italy  (Savoie-
Piedmont),  and  more  are  planned  in  the  coming  years,  such  as  the  Celtic 
Interconnector  and 
timely  finalisation  and 
implementation  of  these  investment  plans would facilitate investments  in  renewables 
and  accelerate  decarbonisation.  It  is  also  crucial  that  long-term  planning  takes  into 
account  interconnections  with  neighbouring  countries,  particularly  with  the  Iberian 
integration.  France’s  cross-border  electricity 
peninsula, 
interconnection  level  was  5.6%  in  2024,  significantly  below  the  EU  target  of  15%43 
for 2030.  

the  Bay  of  Biscay  project.  The 

to  boost  EU  market 

(35)  While the share of companies reporting recruitment difficulties declined in 2024 and 
the  first  quarter  of  2025  with  the  slowdown  of  the  economy,  the  lack  of  adequately 
trained  workers  remains  one  of  the  two  main  barriers  to  recruitment,  together  with 

40 

41 
42 

43 

In 2023, with a share of 22.3% of renewable energy in its gross final energy consumption, France was 
still below its 2020 binding renewable energy target of 23%.  
Bilan électrique 2024 | RTE 
RTE  présente  les  grandes  orientations  de  sa  stratégie  de  transformation  du  réseau  de  transport 
d’électricité à l’horizon 2040 | RTE.  
Defined as import capacity over installed generation capacity in a Member State. 

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labour  shortages,  according  to  a  recent  survey,  especially  in  key  sectors  such  as  the 
automotive,  construction  and  care  sectors44.  France  has  invested  significantly  in 
upskilling  and  reskilling  workers,  with  the  support  of  the  Recovery  and  Resilience 
Facility,  leading  to  a  slight  increase  in  the  number  of  adults  participating  in  training 
(49.2% in 2022, against 48.4 in 2016). However, these programmes have not always 
been successful at increasing the participation of low-skilled people and older workers. 
These  programmes  have  also  had  a  limited  impact  on  participation  in  training  for 
priority sectors (ICT, health, construction, the green transition). The evaluation of past 
and recent investments, such as the Skills Investment Plan (plan d’investissement dans 
les  compétences),  highlights  that  only  25%  of  the  training  offer  concerns  a  priority 
sector  and  20%  of  the  training  offer  targets  occupations  suffering  from  skills 
shortages.  Also,  only  around  25%  of  low-qualified  adults  participated  in  learning  in 
2022.  

the  share  of 

low-achieving  15-year-old  students  has 

(36)  Despite  high  public  spending  on  education,  the  French  education  system  recently 
registered  a  noticeable  decline  in  performance,  further  marked  by  the  significant 
impact of the socio-economic background of students.  French students at primary and 
secondary  level  underperform  in  mathematics  and  science  compared  to  their  EU 
peers45,  and 
increased 
significantly since 2018 in mathematics, reading and science46, while the share of top-
performing  students  declined.  France  also  has  some  of  the  highest  socio-economic 
gaps  in  the  EU.  Improving  students’  performance  in  basic  skills  is  crucial,  starting 
from  an  early  age.  While  first  evaluations  show  that  halving  class  sizes  in  ‘priority 
education  areas’  has  had  a  positive  impact  on  the  educational  outcomes  of  students, 
70% of disadvantaged students attend schools located outside the priority areas and are 
therefore  not  eligible  for  support.  Allocating  additional  resources  in  a  more  gradual 
way and fostering collaboration between disadvantaged schools and local actors could 
be  beneficial  to  address  the  needs  of  low  performing  or  disadvantaged  students.  In 
2023,  the  Ministry  of  Education  took  measures  to  encourage  a  better  social  mix  in 
public and private schools, and introduced a weekly hour of differentiated teaching in 
French  and  mathematics  for  all  students.  However,  frequent  policy  changes  have 
resulted in insufficient time for implementation and evaluation and reduced ownership 
by the teaching community. Making better use of existing data and evaluations, better 
collaborating with the education community, and respecting the pedagogical autonomy 
of schools and teachers could help design a more effective basic skills strategy. 

(37)  Although teachers benefited from a pay rise in 2023, and it is too early to evaluate its 
impact,  concerns  over  the  attractiveness  of  the  profession  remain,  and  teacher 
shortages  weigh  on  educational  outcomes.  Fewer  and  fewer  candidates  take  the 
competitive  recruitment  exams  in  relation  to  the  number  of  open  positions,  making 
these exams less selective, especially in mathematics and for primary teachers in some 
academies47. Several factors may explain the declining attractiveness of the profession. 
In 2022, 63% of post-secondary students cited working conditions, including class size 
(among the largest in the EU), workload, mobility rules, and salary as reasons for not 

44 
45 
46 

47 

France Travail - Enquête besoin en main-d’œuvre 2025.  
2023 Trends in International Mathematics and Science Study (TIMSS) survey. 
According to the 2022 Programme for International Student Assessment (PISA) survey, 28.8% of 15-
year-olds  underperformed  in  mathematics  in  France  vs  29.5%  in  the  EU,  26.9%  underperformed  in 
reading compared to 26.2% in the EU and 23.8% underperformed in science vs 24.2% in the EU. 
France Stratégie, 2024, Working in Public Service: The Challenge of Attractiveness. 

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wanting  to  become  a  teacher48.  In  addition,  increasing  the  reliance  on  temporary 
teachers  with  lower  levels  of  qualifications  and  experience  and  lower  access  to 
training  than  permanent  ones could  affect  teaching quality. Steps have been taken to 
improve  teaching  conditions,  including  the  strengthening  of  training  in  French  and 
mathematics for primary teachers. Nevertheless, there is scope to further expand these 
measures,  in  particular  by  reducing  class  sizes  using  the  decline  in  the  number  of 
children, and by better aligning initial and continuous training with the changing needs 
of  all  students49  and  providing  teachers  and  schools  with  greater  autonomy50.  In 
particular,  the  Court  of  Auditors  warns  that  in  practice,  head  teachers  have  limited 
scope to  adapt  to  students’ needs  and local  circumstances51. Consulting teachers  and 
the wider teaching community on current plans to reform initial education could also 
increase ownership and attractiveness.  

(38)  Children in France face a higher risk of poverty and social exclusion compared to the 
rest of the population (26.2% vs 20.5% in 2024) and to other EU countries (26.2% vs 
24.2%  in  2024).  The  risk  of  child  poverty  and  social  exclusion  has  also  increased 
significantly  in  the  last  years52,  despite  easing  in  2024,  and  the  share  of  French 
children living in jobless households reached 9% in 2024, one of the highest rates in 
the  EU.  Single-parent  families,  often  led  by  single  mothers,  face  significant  and 
specific challenges in finding work53, and among those who work, one in five were at 
risk of poverty in 2024. One of the main barriers they face is access to early childhood 
education and care. France has one of the largest gaps in access to childcare between 
advantaged  and  disadvantaged  children  in  the  EU  (41.6  percentage  points  vs  15.8 
percentage  points).  In  2023,  77%  of  families  living  in  poverty  could  not  afford 
childcare. While the overall share of children having access to childcare is relatively 
high  in  France,  availability  and  costs  differ  widely  across  the  French  territory54.  In 
addition, families working non-standard hours or who are unemployed struggle to find 
suitable  childcare55,  which  hampers  their  job  search  and  training  efforts.  Addressing 
specific barriers to work and improving access to early childhood education and care 
would  help  parents  receive  training,  enabling  better  job  opportunities,  and  improve 
children’s  educational  outcomes  in  the  short  to  long  term,  with  stronger  impacts  on 
disadvantaged children56. 

(39) 

In view of the close interlinkages between the economies of euro-area Member States 
and  their  collective  contribution  to  the  functioning  of  the  economic  and  monetary 
union,  in  2025,  the  Council  recommended  that  the  euro-area  Member  States  take 

48 

49 

50 

51 

52 

53 
54 
55 
56 

Cour  de  Comptes,  Devenir  enseignant :  la  formation  initiale  et  le  recrutement  des  enseignants  des 
premier et second degrés, Rapport public thématique, 2023. 
Education  :  comment  mieux  orienter  la  dépense  publique,  Conseil  d’analyse  économique,  2025, 
available at : Éducation : comment mieux orienter la dépense publique. 
Lastra-Anadón, C. and S. Mukherjee (2019), "Cross-country evidence on the impact of decentralisation 
and school autonomy on educational performance", OECD Working Papers on Fiscal Federalism, No. 
26, OECD Publishing, Paris, https://doi.org/10.1787/c3d9b314-en. 
Cour  des  comptes,  Mobiliser  la  communauté  éducative  autour  du  projet  d’établissement,  Rapport 
public thématique, 2023. 
In  metropolitan  France  (for  which  we  have  comparable  time  series),  the  share  of  children  at  risk  of 
poverty or social exclusion increased from 24.1% in 2019 to 25.7% in 2023.  
Sénat (2024). Familles monoparentales: pour un changement des représentations sociétales. 
CNAF-ONAPE, L'accueil des jeunes enfants - Édition 2024. 
Cour des Comptes, La politique d’accueil du jeune enfant, December 2024. 
OECD  (2025),  Reducing  Inequalities  by  Investing  in  Early  Childhood  Education  and  Care,  Starting 
Strong, OECD Publishing, Paris, https://doi.org/10.1787/b78f8b25-en. 

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action,  including  through  their  recovery  and  resilience  plans,  to  implement  the  2025 
Recommendation  on  the  economic  policy  of  the  euro  area.  For  France,  the 
recommendations  (2),  (3),  (4)  and  (5)  help 
the  first  euro-area 
recommendation  on  competitiveness,  while  the  recommendations  (4)  and  (5)  help 
implement 
the 
recommendation (1) helps  implement  the third euro area recommendation  on  macro-
economic and financial stability set out in the 2025 Recommendation. 

recommendation  on 

second  euro-area 

resilience,  and 

implement 

the 

HEREBY RECOMMENDS that France take action in 2025 and 2026 to:  

1. 

2. 

3. 

4. 

Reinforce overall defence spending and readiness in line with the European Council 
conclusions  of  6  March  2025.  Adhere  to  the  maximum  growth  rates  of  net 
expenditure  recommended  by  the  Council  on  21  January  2025,  with  a  view  to 
bringing an end to the situation of an excessive deficit. Implement the set of reforms 
and  investments  underpinning  the  extended  adjustment  period  as  recommended  by 
the Council on 21 January 2025. 

In  view  of  the  applicable  deadlines  for  the  timely  completion  of  reforms  and 
investments under Regulation (EU) 2021/241, ensure the effective implementation of 
the recovery and resilience plan, including the REPowerEU chapter.  Accelerate the 
implementation of cohesion policy programmes (ERDF, JTF, ESF+), building, where 
appropriate, on the opportunities offered by the mid-term review. Make optimal use 
of EU instruments, including the scope provided by  the InvestEU and the Strategic 
Technologies for Europe Platform, to improve competitiveness. 

Further simplify regulation, reduce administrative burden and regulatory restrictions 
on firms, in particular in the services sector. Strengthen business R&D intensity by 
better targeting public support schemes that  incentivise business R&D and promote 
diffusion  of  innovation,  and  by  making  the  ecosystem  that  supports  collaboration 
between  academia  and  businesses  more  effective.  Improve  SME  digitalisation, 
including  by  improving  the  effectiveness  of  existing  public  support  measures 
dedicated to this objective. 

Accelerate  the  reduction  of  greenhouse  gas  emissions  by  removing  barriers  and 
providing  incentives  to  increase  the  demand  and  supply  of  low-emission  transport 
modes and vehicles, by stepping up energy efficiency and reducing reliance on fossil 
fuels in buildings through incentivising deep renovations. Accelerate the deployment 
of renewable energy projects including by further streamlining permitting procedures 
and  by  completing  the  setting  up  of  the  ‘renewables  acceleration  areas’.  Promote  
demand-side flexibility and storage technologies, and ensure sufficient investment in 
electricity grid capacity including in cross-border interconnections. 

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5. 

the 

improving 

labour  market  relevance  of 

Further address skills shortages by supporting access to training for low-skilled and 
training 
older  people  and 
offer. Improve  educational  outcomes  and reduce  inequalities in  education including 
by  ensuring  that  all  disadvantaged  students  benefit  from  improved  educational 
support. Strengthen  the  teaching  profession,  including  by  improving  working 
conditions and initial  and continuous training of teachers. Prevent  and reduce child 
poverty,  by  removing  barriers  that  hinder  parents’  labour  market  integration  and 
access  to  quality  early  childhood  education  and  care  for  the  most  disadvantaged 
households. 

the 

Done at Brussels, 

For the Council 
The President 

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