Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of France
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: France, budget policy, defence policy, economic policy, economic recovery, economic reform, employment policy, fiscal policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 3.6.2026  COM(2026) 210 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of France    {SWD(2026) 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  1466/97  (1),  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: 

(1) 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  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 
Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  The  European  Semester 
includes, in  particular, the formulation and the surveillance of the implementation  of 
country-specific recommendations. 

(2) 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 

1 

EN 

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 
ELI: 
Council 
http://data.europa.eu/eli/reg/2024/1263/oj). 

(EC)  No 

2024/1263, 

Regulation 

30.4.2024, 

1466/97 

(OJ 

L, 

1 

  EN 

 
 
 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (2). The proposal 
aims to increase the effectiveness of Union funding by reducing the fragmentation of 
the  financial  architecture  and  to  support  Member  States’  in  the  coordination  of  their 
economic policy in line with Article 175 of the TFEU.  

On  25 November 2025,  the  Commission  adopted  an  opinion  on  the  2026  draft 
budgetary  plan  of  France.  On  the  same  date,  on  the  basis  of  Regulation  (EU)  No 
1176/2011,  the  Commission  adopted  the  2026  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,  a  recommendation  for  a 
Council recommendation on human capital in the European Union, and a proposal for 
the  2026  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 area (3) 
on  21  April  2026,  and  the  Joint  Employment  Report,  and  the  Recommendation  on 
human capital on 9 March 2026.  

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass,  ensuring  that  Member  States’  economic  policies  are  consistent  with  the 
to  economic 
Commission’s  strategic  objectives,  creating  a  unified  approach 
governance that fosters sustainable growth, innovation and resilience across the Union. 

In  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  the  Recovery  and  Resilience  Facility  (RRF)  (4). 
Recovery and resilience plans (RRPs), along with cohesion policy funding, have been 
essential  for  delivering  on  the  policy  priorities  under  the  European  Semester,  as  the 
plans  were  required  to  effectively  address  all  or  a  significant  subset  of  challenges 
identified  in  the  relevant  country-specific  recommendations  issued  in  recent  cycles, 
and  programmes  funded  by  the  European  cohesion  policy  were  required  to  take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  it  the  RRF,  in  particular  those  that  contribute  to  addressing 
challenges identified in the country-specific recommendations. 

On  3  June  2026,  the  Commission  published  the  2026  country  report  for  France.  It 
country-specific 
assessed  France’s  progress 
recommendations and took stock of France’s implementation of the RRP. On the basis 

addressing 

relevant 

the 

in 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the  European 
Fund  for  economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime, 
prosperity  and  security  for  the  period  2028-2034  and  amending  Regulation  (EU)  2023/955  and 
Regulation (EU, Euratom) 2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the 
subject of negotiations with the co-legislators. 

OJ C, C/2026/2434, 28.4.2026, ELI: http://data.europa.eu/eli/C/2026/2434/oj  
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). 

the  Recovery  and  Resilience  Facility 

(3) 

(4) 

(5) 

(6) 

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3 
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of  that  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.  

On  21 January 2025,  the  Council,  upon  the  assessment  and  recommendation  of  the 
Commission, adopted a Recommendation endorsing the national medium-term fiscal-
structural  plan  of  France  (5).  The  plan  covers  the  period  from  2025  until  2029  and 
presents  a  fiscal  adjustment  spread  over  seven  years.  The  Council  recommended  the 
following  maximum  growth  rates  of  net  expenditure:  0.8%  in  2025,  1.2%  in  2026, 
1.2%  in  2027,  1.2%  in  2028  and  1.1%  in  2029,  which  correspond  to  the  maximum 
cumulative growth  rates  calculated by  reference to the base year of 2023  of 4.6% in 
2025,  5.8%  in  2026,  7.1%  in  2027,  8.4%  in  2028  and  9.5%  in  2029.  For  the  years 
2025-2029,  these  maximum  growth  rates  of  net  expenditure  coincide  with  the 
corrective  path,  as  recommended  by  the  Council  under  Article  126(7)  TFEU  on  21 
January  2025,  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive 
deficit (6).  Based  on 
the  Commission’s  assessment  on  effective  action  of 
3 June 2026 (7), the excessive deficit procedure for France is held in abeyance. 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  has  invited  Member 
States  to  request  the  activation  of  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  (8)  and  this  proposal  was  welcomed  by  the 
European Council of 6 March 2025. Member States may still request the activation of 
the national escape clause at any time until 2028, if they fulfil the criteria set in Article 
26 of Regulation (EU) 2024/1263. 
On 7 May 2026, France submitted its 2026 Annual Progress Report (9) on adherence 
to the recommended maximum growth rates of net expenditure, 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 implementing its recovery and resilience plan in accordance with Article 27 of 
Regulation  (EU)  2021/241.  The  report  on  action  taken  under  the  excessive  deficit 
procedure is integrated in the Annual Progress Report. 

Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of France (OJ C, C/2025/659, 10.02.2025, ELI: http://data.europa.eu/eli/C/2025/659/oj. 
Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
France, adopted on 21 January 2025. All documents related to the excessive deficit procedure of France 
can  be  found  at:https://economy-finance.ec.europa.eu/economic-governance-framework/stability-and-
growth-pact/corrective-arm-excessive-deficit-procedure/excessive-deficit-procedures-
overview/france_en. 
Communication from the Commission to the European Parliament, the Council, the European Central 
Bank,  the  European  Economic  and  Social  Committee,  the  Committee  of  Regions  and  the  European 
Investment Bank, 2026 European Semester – Spring Package, COM(2026) 302 final. 
Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19.3.2025, C(2025) 2000 final.0 
The  2026 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. 

(7) 

(8) 

(9) 

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(10)  Real  GDP  growth  in  2025  was  0.8%  and  HICP  inflation  stood  at  0.9%.  The 
Commission  Spring  2026  Forecast  projects  real  GDP  to  grow  by  0.8%  in  2026  and 
1.1% in 2027, and HICP inflation to stand at 2.4% in 2026 and 1.8% in 2027. 
(11)  Based  on  data  provided  by  Eurostat  (10),  France’s  general  government  deficit 
decreased from  5.8% of  GDP in  2024 to 5.1% of GDP in  2025. The decrease in  the 
deficit  in  2025  mainly  reflects  revenue-increasing  measures  of  around  0.5%  of  GDP 
and  expenditure-decreasing  measures,  mainly  on  public  consumption  and  social 
transfers, worth almost 0.3% of GDP, as well as tax revenues growing above nominal 
GDP. This dynamism of revenues mainly stemmed from indirect and corporate taxes. 
These factors more than offset the 0.2 pp. increase in interest payments on government 
debt, driven by higher debt and higher interest rates on new bond issuances. Based on 
policy  measures  known  by  the  cut-off  date  of  the  forecast,  the  Commission  Spring 
2026 Forecast projects a deficit of 5.1% of GDP in 2026 and 5.7% of GDP in 2027. 
The  unchanged  deficit  in  2026  is  due  to  a  number  of  factors.  On  the  one  hand,  it 
reflects revenue-increasing measures worth 0.5% of GDP (of which 0.3% of GDP are 
temporary) which include, among others, the extension of the exceptional contribution 
by  large  enterprises,  the  top-up  tax  on  high  revenues  and  the  increase  of  the 
generalized  social  contribution  (CSG)  on  financial  revenues,  as  well  as  the 
retrenchment efforts in expenditure endowments to the different ministries and public 
administrations set out in the 2026 budget. On the other hand, excluding the effect of 
these  measures,  tax  receipts  are  expected  to  grow  slightly  below  economic  activity. 
Moreover, apart from its negative impact on growth, the conflict in the Middle East is 
set to entail an additional direct budgetary impact of 0.2% of GDP linked to a higher 
interest burden on inflation-indexed bonds (0.1% of GDP), lower revenues due to the 
indexation  of  social  security  exemptions  linked  to  the  minimum  wage  and  higher 
military expenditure on missions in that area. This impact is set to be broadly offset by 
additional expenditure savings announced in April. The increase of the deficit in 2027 
mainly reflects the phasing out of temporary revenue measures in 2026 worth 0.3% of 
GDP. 

(12)  Based  on  the  Commission’s  estimates,  the  fiscal  stance  (11),  which  includes  both 
nationally  and  EU  financed  expenditure,  was  contractionary,  by  0.9%  of  GDP,  in 
2025. It is projected to be contractionary, by 0.9% of GDP, in 2026, and expansionary, 
by 0.3% of GDP, in 2027. 

(13)  Based on data provided by Eurostat (12), France’s general government debt increased 
from 112.6% of GDP at the end of 2024 to 115.6% of GDP at the end of 2025. The 
increase  in  the  debt  ratio  in  2025  mainly  reflects  high  primary  deficits  and  rising 
interest payments, which more than offset the debt-reducing effect of nominal growth. 
Based on policy measures known at the cut-off date of the forecast, the Commission 
Spring 2026 Forecast projects the debt-to-GDP ratio to increase to 118.1% by the end 
of 2026 and to further increase to 120.2% by the end of 2027. The increases in 2026 
and 2027 mainly reflect the same factors as in 2025. 

10 
11  

12  

Eurostat-Euro Indicators, 22.04.2026.  
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. 
Eurostat-Euro Indicators, 22.04.2026. 

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(14)  Based  on  Eurostat  data  (13),  total  general  government  defence  expenditure  in  France 
amounted  to  1.9%  of  GDP  in  2025.  According  to  the  Commission  Spring  2026 
Forecast, it is projected at 2.1% of GDP in 2026.  

(15)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 
markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient. Since the outbreak of the war in the Middle East in February 2026, France 
adopted  a  number  of  targeted  fiscal  policy  measures  to  mitigate  the  impact  of  high 
energy  prices  on  households  and  firms  (14).  These  include  the  reimbursement 
corresponding to an estimated cost of EUR 20 cents per litre of fuel prices for micro 
enterprises and SMEs in the public transport sector, fisheries (increased in this case in 
May), and  construction  and public work  companies  in  April and May;  an equivalent 
reimbursement  for  low-income  workers  for  the  professional  use  of  private  vehicles 
between  April  and  June;  the  reimbursement  for  farmers  of  excise  duties  on  off-road 
diesel of EUR 4 cents per litre in April, raised in May to EUR 15 cents per litre; and 
the  exceptional  defrayal  of  social  security  contributions  for  most  affected  farmers  in 
April. In principle, these measures are set to be phased out in June 2026 and their cost 
factored in the Commission Spring 2026 Forecast amounts to less than 0.1% of GDP. 
According  to  Commission  estimates,  if  these  measures  were  to  remain  in  force  until 
end-2026, their fiscal cost would remain below 0.1% of GDP in 2026. 

(16)  Based on the Commission’s calculations, net expenditure in France grew by 0.7% in 
2025 and 4.0% cumulatively in 2024 and 2025. The net expenditure growth in 2025 is 
below  the  recommended  maximum  growth  rate.  When  considering  2024  and  2025 
together,  the  cumulative  growth  rate  of  net  expenditure  is  also  below  the 
recommended maximum growth rate. 

(17)  Based  on  the  Commission’s  calculations,  net  expenditure  in  France  is  projected  to 
grow  by  1.4%  in  2026,  and  5.4%  cumulatively  over  2024,  2025  and  2026.  The 
projected  net  expenditure  growth  in  2026  is  above  the  recommended  maximum 
growth  rate,  corresponding  to  a  deviation  of  0.1%  of  GDP  in  annual  terms.  When 
considering 2024, 2025 and 2026 together, the projected cumulative growth rate of net 
expenditure is below the recommended maximum growth rate. 

in 

its  Annual  Progress  Report, 

(18)  The  recommendation  endorsing  the  medium-term  plan  of  France  specifies  the  set  of 
reforms and investments underpinning the extension of the adjustment period, together 
with a timeline for their implementation. Taking into account the information provided 
by  France 
the 
implementation of the key steps of these reforms and investments that were due by 30 
April 2026 seems to be broadly on track. However, the recasting of the exemptions of 
social  security  contributions  around  the  minimum  salary  have  yielded  lower  savings 
than committed. The Commission considers that, overall, France has complied with its 
commitments  in  a  satisfactory  manner.  Looking  ahead,  the  2023  pension  reform  has 
been suspended until January 2028 (15). 

the  Commission  finds 

that 

13  
14 
15 

Eurostat, government expenditure by classification of functions of government (COFOG). 
This reflects the situation at the cut-off date of the Commission’s Spring 2026 Forecast (4 May 2026). 
Communication from the Commission to the European Parliament, the Council, the European Central 
Bank,  the  European  Economic  and  Social  Committee,  the  Committee  of  Regions  and  the  European 
Investment Bank, 2026 European Semester – Spring Package, COM(2026) 200 final. 

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(19)  France  continues  to  face  high  fiscal  sustainability  risks  in  the  medium  term  and 
medium  sustainability  risks  in  the  long  term.  A  comprehensive  and  consistent  fiscal 
strategy on both the revenue and expenditure sides is needed to boost potential growth 
and to bring public debt on a downward path to ensure its sustainability. At 57.2% of 
GDP in 2025, France’s public expenditure remained the second highest in the EU, and 
7.7 percentage points above the EU  average. The Commission  Spring 2026 Forecast 
projects  this  gap  to  remain  around  7  percentage  points  in  2026.  Persistently  high 
public  expenditure  in  France  raises  efficiency  concerns,  while  also  requiring  a  high 
overall tax burden, which in turn weighs on economic efficiency. As a result, lasting 
fiscal consolidation in France calls for decisive action on public spending, in terms of 
its  level,  composition  and  overall  efficiency.  To  this  end,  enhanced  saving 
commitments  with  respect  to  those  in  the  French  medium-term  fiscal-structural  Plan 
are needed. A consistent and effective strategy to permanently reduce public spending 
while  enhancing 
to  systematically  rely  on  ambitious  and 
comprehensive spending reviews at the core of the budgetary process consistent with 
the medium-term priorities. Apart from contributing to fiscal consolidation, this would 
strengthen  France’s  growth  potential  by  helping  channel  public  resources  to  more 
growth-friendly policies. 

its  quality  needs 

(20)  At  14.6%  of  GDP  in  2023,  public  pension  expenditure  in  France  is  relatively  high. 
According  to  the  2024  Ageing  Report,  the  old-age  dependency  ratio  is  projected  to 
increase significantly in  the coming decades, rising from 38.2% in 2022 to 53.2% in 
2050 and 57.8% in 2070. In turn, the effective retirement age is low, at 62.2 in 2022. 
Among  other  elements,  the  2023  pension  reform  contributed  to  improving  the 
sustainability  of  the  public  finances  by  speeding  up  the  increase  of  the  required 
contribution period to receive a full pension and by gradually increasing the minimum 
retirement age, to boost employment and potential growth. In its medium-term fiscal-
structural Plan France committed to preserve the impact of the 2023 pension reform on 
the  financial  sustainability  of  the  system  over  the  period  2026-2040.  However,  in 
December 2025 the reform was suspended until January 2028. This suspension entails 
a worsening  of the general  government  budget  balance until  the mid-2030s, a public 
debt  increase  and  a  dampening  of  the  positive  labour  market  effects  of  the  reform, 
whereas the challenges referred to earlier remain still very significant. 

(21)  The tax burden in France remains significantly higher than the EU average. In 2025, 
tax  revenues  in  France  represented  44.3%  of  GDP,  against  39.9%  for  the  EU-27  on 
average, with the implicit tax rate on labour and taxes on labour borne by employers 
also being among the highest in the EU. At 4.4% of GDP in 2024, taxes on production, 
which are  especially  detrimental to  growth,  are  well above the EU  average (2.4% of 
GDP)  too,  which  weighs  on  competitiveness.  Specifically,  production  taxes,  namely 
on total wage bill and payroll, and on land, buildings and other structures,  are above 
the  EU  average.  However,  consumption  taxes  are  relatively  low,  despite  being  less 
distortive. At the same time, the numerous fiscal and social tax expenditures increase 
the  complexity  of  the  tax  system,  bring  about  significant  allocative  efficiency  losses 
and imply a heavy budgetary burden (of almost 6% of GDP in 2025). A more growth-
friendly  tax  mix  would  call  for  a  comprehensive  fiscal  strategy  aimed  to  enhance 
potential growth and the overall efficiency of the tax system, while supporting fiscal 
consolidation.  Reducing  the  tax  burden  on  labour  (including  social  security 
contributions)  and  productive  capital,  while  raising  consumption  taxes,  including 
environmental  taxes,  could  help  reduce  the  economic  distortions  and  support 
competitiveness and growth. Moreover, reducing and rationalising fiscal and social tax 

EN 

6 

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expenditures  would  contribute  to  broadening  tax  bases,  thereby  helping  to  avoid 
increases in statutory rates. 

(22)  The  level  of  administrative  complexity  in  France  is  high.    The  coexistence  of  many 
administrative  layers  involves  complex  financial  relationships  across  different  levels 
of  government  and  overlapping  competences.  These  bring  about  redundant 
coordination  costs,  without  necessarily  improving  the  quality  of  public  services 
provided.  Reducing  administrative  complexity  and  clarifying  competences  and 
financial  responsibilities  across  the  different  levels  of  government  would  help  the 
effective  steering  of  expenditure  and  revenues,  in  line  with  budgetary  commitments. 
This  would  increase  the  overall  efficiency  and  quality  of  public  expenditure,  while 
underpinning fiscal consolidation.  

(23)  Regional disparities in public services persist, such as healthcare (notably in ‘medical 
deserts’),  education,  mobility,  and  housing,  with  rural  areas  facing  particular 
challenges in  accessing essential services.  In  France’s outermost regions, weak land-
use  planning  and  limited  administrative  capacity  further  hinder  effective  policy 
implementation and public investment. 

(24)  The systematic, meaningful and timely 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  Union's  funding 
instruments, as well as in the context of the European Semester.  

(25)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF)  and  the  European  Social  Fund 
Plus (ESF+) in France, is above the average pace at EU level, both in terms of project 
selection  and  payments.  It  is  important  to  keep  current  momentum,  maximising  the 
impact  of  investments  on  the  ground.  France  is  already  taking  action  under  its 
cohesion  policy  programmes  to  boost  competitiveness  and  growth.  However,  some 
programmes in the outermost regions continue to face implementation challenges and 
encounter difficulties in meeting their programmes’ targets. At the same time, France 
needs  to  accelerate  implementation  of  JTF  as  resources  are  due  for  disbursement  by 
the end of 2026. It is essential to ensure that the new investments identified by France 
in  its mid-term  review of the cohesion  policy funds, notably those linked to  the five 
priorities identified in the Mid-Term Review Regulation (16), are deployed rapidly and 
effectively. 

(26)  Aside  from  the  challenges  described  above,  France  also  faces  challenges  related  to 
administrative  and  regulatory  burden,  intensity  of  business  R&D,  support  for 
disruptive innovation, 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  as  well  as  the  electrification  of  end  uses,  water  quality  and  scarcity,  skills 
shortages,  youth  labour  market  outcomes,  the  education  system,  the  teaching 
profession and in-work 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  administrative 

16 

Regulation  (EU)  2025/1914  of  the  European  Parliament  and  of  the  Council  of  18  September  2025 
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. 

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procedures. To reduce administrative burden, France needs to take further action. This 
would  also  entail  increased  availability  of  digital  public  services  for  citizens  and 
businesses,  given  that  their  provision  has  stagnated  and  remains  below  the  EU 
average.  In  mid-April  2026,  the  law  on  simplifying  economic  life  was  adopted.  The 
law introduces ‘enterprises test’ and a dedicated body, the Council  for Simplification 
associating  representatives  of  businesses,  to  test  the  new  and  modified  norms.  The 
Council for Simplification may also be consulted on the existing norms. The law eases 
the  setting  up  of  industrial  and  infrastructure  projects  and  data  centres,  subject  to 
conditions,  and  facilitates  energy  transition  projects.  The  law  also  facilitates 
businesses’ access to public procurement. A significant and increasing share of firms 
in France considered labour market regulations and business regulations to be a major 
obstacle to investment (17). The procedures relating to cessation of payment, cessation 
of activity and legal proceedings are considered to be the most complex to carry out. 
While  the  simplification  law  facilitates  business  transfers,  it  does  not  address  the 
cessation of activity procedures. 

(28)  Regulatory restrictions on domestic firms remain higher in France than in comparable 
countries  for  several  professions  and  are  among  the  highest  in  the  EU  for  retail. 
Reviewing  compulsory  local  examinations  for  foreign  professionals,  reducing 
mandatory  minimum  fees,  and  offering  alternatives  to  mandatory  membership  of  a 
professional  body  could  better  support  the  growth  of  new  innovative  businesses  and 
reduce  the  cost  of  intermediate  inputs.  Easing  restrictions  on  retail  –  such  as 
registration  requirements,  authorisations  and  operational  constraints  –  could  help 
improve business operations and benefit consumers through competitive prices and a 
broader  product  choice.  Simplifying  the  regulatory  environment  for  the  construction 
sector,  including  land-use  regulations  and  permitting  could  help  address  housing 
supply constraints. National packaging and labelling rules impose compliance burdens 
on goods trade. According to the Commission’s assessment and the OECD, regulatory 
restrictions  to  cross-border  intra-EEA  trade  in  services  in  France  are  among  the 
highest in the EU, particularly in architecture, legal services, accounting,  distribution 
services, air transport, rail freight and road freight. Improved market access conditions, 
more transparent  licensing, and lower barriers  to the movement  of people, supported 
by efforts to reduce digital trade frictions, could enable France to harness productivity 
and competitiveness gains. 

(29)  Despite  having  one  of  the  highest  shares  of  public  support  for  business  R&D  in  the 
EU,  France's  private  R&D  is  stagnating  and  remained  somewhat  below  the  EU 
average in 2024. The main mechanism, the research tax credit, is projected to rise to 
EUR 8.0 billion in 2026 (0.3% of GDP) (18). 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.  Better targeting  the aid  to  innovative SMEs, mid-cap companies 

17 

18 

27% and 26% for labour market and business regulations respectively in 2025, up from 20% and 19% 
in  2024.  Overall,  around  60%  of  businesses  considered  those  regulations  to  be  impediment  to 
investment in 2025 in France. 2025 and 2024 EIB investment surveys. 
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.  Bunel,  S.  and  Sicsic,  M.  (2024),  ‘Les  incitations 
fiscales  à  la  recherche  et  développement  et  à  l’innovation  :  état  des  lieux,  effets  et  alternatives’, 
Sciences Po LIEPP Working Paper n°163. 

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and start-ups and facilitating their uptake of the scheme could boost R&D since those 
firms  are  more  financially  constrained.  Lowering  the  threshold  of  eligible  expenses 
under  the  research  tax  credit  and  increasing  the  advantage  for  smaller  and  younger 
innovative  companies  could  make  the  scheme  more  effective  in  increasing  R&D 
intensity by increasing additionality effects. 

(30)  Targeted  innovation  support,  as  provided  by  the  France  2030  investment  plan, 
typically  supports  an  increase  in  intangible  investment  including  in  intellectual 
property,  leading  to  increased  productivity  and  competitiveness  (19).  A  2023 
evaluation  of  France  2030  indicates  a  sizeable  impact  on  GDP  and  employment, 
although  a  streamlining  of  the  support  could  be  beneficial.  However,  France  is 
accelerating  the  phasing-out  of  France  2030  and  there  are  no  indications  of  an 
investment plan that would succeed it. Introducing a multiannual strategic investment 
programme  channelled  towards  disruptive  innovation  and  covering  the  whole 
research-innovation cycle, with improved governance in line with lessons learnt from 
France  2030  (20),  could  accelerate  the  deployment  of  new  technologies  and  support 
industrial  sovereignty  in  key  strategic  sectors,  economic  security  and  long-term 
growth.  

(31)  French scale-ups continue to face a sizeable funding gap.  On average, a French firm 
has  raised  only  60%  as  much  capital  as  a  comparable  firm  in  the  United  States,  ten 
years after its creation (21). As scale-ups are more productive and more innovative than 
other firms, addressing the innovation funding gap and increase investment in venture 
capital and private equity would raise France’s growth prospects. This can be achieved 
by  further  leveraging  institutional  investor  funds,  including  through  ‘Tibi  initiative’, 
mobilising  retail  investment  and  ultimately  facilitating  access  to  the  initial  public 
offering  (IPO)  markets  (22).  More  broadly,  the  savings  and  investment  ecosystem  in 
France  could  be  strengthened  for  the  benefit  of  the  economy  by  increasing  equity 
holdings by institutional investors such as pension funds and insurance companies and 
encouraging equity investment by retail investors, notably via the Plan d’Epargne en 
Actions (PEA).  

(32)  Closer links between science and business are key for generating innovation. A wide 
range of entities (23) and instruments have been introduced to support such cooperation 
in  France.  However,  the  complexity  of  France's  technology  transfer  and  research 

19 

20 

21 

22 

23 

of 

EU 

from 

59(3), 

Income 

and  Wealth, 

1998-2005.Review 

Roth, F., & Thum, A. E. (2013). Intangible capital and labor productivity growth: Panel evidence for 
the 
486e508. 
https://doi.org/10.1111/roiw.12009; Dimas, P., D. Stamopoulos and A. Tsakanikas (2022), ‘Intangibles 
and Participation in Global Value Chains in the EU: Evidence from the GLOBALINTO Input-Output 
Intangibles Database’, Economic and Business Review.  
Cour  de  comptes  (2024)  ‘10  ans  de  politiques  publiques  en  faveur  de  l’industrie’,  pages  86-87  ;  le 
Comité de surveillance des investissements d’avenir (2026),  ‘France 2030 : un déploiement massif et 
rapide à pérenniser, un impact à renforcer’, 2ce0410dc4f9499917f929e71c6f716395ef68aa.pdf. 
Fratto,  C.,  Gatti,  M.,  Kivernyk,  A.,  Sinnott,  E.,  &  van  der  Wielen,  W.  (2024).  The  scale-up  gap: 
Financial  market  constraints  holding  back  innovative  firms  in  the  European  Union,  European 
Investment Bank. https://doi.org/10.2867/382579. 
According  to  EIF  Equity  survey  2025  (eif-equity-survey-2025.pdf),  almost  half  of  general  partners 
managing  venture  capital  funds  in  Europe  cited  initial  public  offering  markets  as  a  major  obstacle  to 
scaling up. Other even more important obstacles stem from fragmented markets, access to capital, and a 
lower investor appetite for risk.  
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). 

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valorisation  ecosystem,  as  highlighted  by  the  Inspection  générale  des  finances  in 
2024 (24),  represents  a  significant  barrier.  A  review  of  the  governance  and  financing 
model  of  the  technology  transfer  acceleration  companies  (SATT)  and  more  broadly 
their role to improve technology transfer at local level was launched in 2025, with the 
objective  of  a  new  organisational  set  up  by  2027.  To  improve  innovation  outcomes, 
the  effectiveness  of  the  knowledge  and  technology  transfer  ecosystems  needs  to  be 
increased.  This  can  be  achieved  by  targeting  concrete  outcomes,  such  as  a  sizeable 
increase  in  patent  filings,  intellectual  property  protection,  and  business  creation. 
Simplifying the ecosystems, for instance by streamlining the roles of existing entities 
or boosting collaboration between them, could also yield better results. 

(33)  Despite progress in the digitalisation of SMEs and in the adoption of advanced digital 
technologies,  France  is  still  below  the  EU  average.  Key  bottlenecks  of  SME 
digitalisation  include  a  lack  of  expertise  and  skills,  cybersecurity  concerns,  and 
financial constraints, particularly due to unclear returns on investment. Delayed digital 
adoption, particularly in SMEs is one of the factors weighing on productivity growth 
and  competitiveness  in  France.  Accelerating  the  digitalisation  of  SMEs  is  key  to 
meeting the EU’s 2030 digital targets, which state that more than 90% of the European 
Union’s  SMEs  should  achieve  at  least  a  basic  level  of  digital  intensity  by  2030. 
‘France  Num’  remains  the  main  public  tool  supporting  basic  SME  digitalisation, 
acting mainly as a network of stakeholders involved in digital transformation. The new 
plan  ‘Osez  l’IA’  aims  at  diffusing  AI  technologies  in  large  firms  and  SMEs,  hence 
contributing to digitalisation. However, it is neither targeted at SMEs, nor focused on 
basic digitalisation.  

(34)  The slowdown in decarbonisation observed in 2024 continued in 2025. All sectors are 
off track to meet the 2030 targets set in France’s third draft low-carbon strategy, with 
the  largest  gaps  in  buildings  and  transport,  compounded  by  the  declining  natural 
carbon  sinks,  which  offset  greenhouse  gas  (GHG)  emissions.  Transport  remains  the 
main  source  of  GHG  emissions  in  France.  Accelerating  the  decarbonisation  of  road 
transport  is  essential  to  meet  GHG  emissions  reduction  targets.  Freight  transport  in 
France  remains  largely  road  based.  To  support  a  modal  shift  from  road  to  rail  and 
inland waterways, France needs to complete the Trans-European Transport Network to 
increase capacity and network density as well as ensure adequate investments in  rail 
infrastructure. Inland waterways also offer high decarbonisation potential and could be 
tapped  further  by  improving  the  quality  of  the  inland  waterway  networks,  the  river 
information  services’  interoperability,  data  availability,  and  terminal  density.  France 
could  further encourage  the up-take of low-emission vehicles by disincentivising the 
purchase  of  combustion  engine  vehicles,  by  exempting  electric  heavy-duty  vehicles 
from tolls on high-speed roads and internalising the external cost of CO₂ emissions of 
conventional heavy-duty vehicles in tolls. 

(35)  Final  energy  consumption  in  the  residential  and  tertiary  buildings  sector  has  largely 
stagnated since 2015 and rose by 1% in 2024, and GHG emissions decreased by only 
1.5% in 2025 (compared to -0.7% in 2024), according to the latest estimates by Citepa. 

24 

Monitoring  Committee  for  Investments  for  the  Future.  Evaluation  of  the  First  Wave  of  the  Future 
Investment Program (PIA, 2009-2019), November 2019, Le PIA, un outil à préserver, une ambition à 
refonder;  Cour  des  comptes  (2018),  Les  outils  du  PIA  consacrés  à  la  valorisation  de  la  recherche 
publique; Inspection générale des finances (2024), Évaluation des dispositifs Carnot. 

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France remains off track to meet its third carbon budget for the sector (25). The number 
of  energy  renovations  declined  by  10%,  based  on  data  from  the  French  National 
Housing  Agency,  reflecting  repeated  ‘stop-and-go’  changes  to  ‘MaPrimeRenov’’ 
scheme. This instability – through interruptions, changing type of work eligible and of 
income  conditions  to  access  financing  –  has  weakened  momentum,  reduced 
predictability  for  households  and  the  sector,  and  slowed  the  deployment  of  heat 
pumps.  The  shift  towards  energy  savings  certificates  (CEEs)  may  also  prove  less 
effective, as highlighted by the French Court of Auditors (26), that assessed the scheme 
as too complex and costly and raising equity concerns. France therefore needs to step 
up efforts to meet its 2030 buildings emissions target under its third draft low-carbon 
strategy  (SNBC-3),  in  particular  by  simplifying  schemes  and  ensuring  stable, 
predictable  support.  This  includes  prioritising  ambitious  renovations  (namely,  that 
achieve at least 30% of energy savings) and targeting vulnerable households.  

(36)  France  reached  its  legally  binding  2020  renewable  energy  target  in  2024,  with 
renewables  accounting  for  23.2%  of  final  energy  consumption  –  four  years  behind 
schedule. It remains off track relative to its indicative contribution (27) to the EU 2030 
target  of  42.5%.  After  several  years  of  consultation,  the  third  multi-annual  energy 
programme  (PPE-3)  was  finally  adopted  in  February  2026,  helping  to  clarify  the 
policy framework and providing greater predictability for investments. Achieving the 
2030  and  2035  national  objectives  and  restoring  confidence  among  investors  and 
developers  will  require  the  full  implementation  of  the  2023  Renewable  Energy 
Acceleration Law (28), a reform included in France’s recovery and resilience plan and 
in its medium-term fiscal-structural plan in order to underpin an extension of the fiscal 
adjustment period. Key barriers still need to be addressed, in particular the slow and 
complex  permitting  procedures  linked  to  the  absence  of  a  one-stop-shop  system. 
Finally,  the  rapid  launch  of  tenders  across  all  technologies,  together  with  a  greater 
regionalisation of energy planning – in particular in outermost regions facing specific 
constraints  –  will be essential  to  deliver on  France’s  renewable energy  ambition and 
support the scaling-up of domestic and EU clean technology value chains in strategic 
sectors. 

(37)  The increasing curtailment of renewable electricity together with a growing number of 
negative price events highlight the need to further develop demand-side flexibility and 
storage  capacities,  including  thermal  storage.  While  some  progress  has  been  made, 
including  with  additional  battery  capacities  installed  in  2025,  further  efforts  are 
required  to  integrate  rising  volumes  of  renewable  electricity  and  ensure  security  of 
supply.  This  also  underscores  the  need  for  both  domestic  and  cross-border  grid 
reinforcement.  Electricity  system  operators  (RTE  (29)  and  Enedis)  have  committed 
substantial  investments  to  expand  and  modernise  transmission  and  distribution 

25 

26 

27 

28 

29 

At 56 MtCO2e, France is below its third carbon budget for the sector, which is set at an average of 52 
MtCO2e over 2024-2028. 
Cour  des  Comptes,  2024  Les  certificats  d'économies  d'énergie,  communication  à  la  commission  des 
finances, de l’économie générale et du contrôle budgétaire de l’Assemblée nationale. 
The formula set out in Annex 2 of the Governance Regulation indicates that France’s target should be 
44% by 2030. 
Around one quarter of the required implementing acts are still pending and only 16,000 municipalities 
have designated ‘renewable acceleration zones’. 
RTE major investment plan of 100 bn EUR until 2024 has been approved by the French Regulator in 
February 2026 :  Examen du schéma décennal de développement du réseau de RTE élaboré en 2025 | 
CRE. 

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investment  needs,  delivery 

networks. However,  even though France is broadly progressing towards  its projected 
remains  contingent  on  sufficient 
infrastructure 
manufacturing and human capacity, including skilled labour and cables production and 
supply.  In  comparison,  progress  on  cross-border  projects  remains  limited:  France 
electricity’s  interconnection  level  reached  5.44%  in  2025,  well  below  the  2030  EU 
target of 15%. Although France is interconnected with its neighbouring countries and 
new projects are underway, delays persist and key projects, such as the trans-Pyrenean 
interconnection,  are  not  fully  reflected  in  current  planning  despite  their  Project  of 
Common Interest status. Strengthening cross-border interconnection capacity remains 
essential to help manage electricity surplus generation in the short term, enhance EU 
market integration, system  flexibility, and renewable expansion, particularly with the 
Iberian Peninsula.  

(38)  The  recent  increase  in  supply  and  availability  of  clean  electricity  (through  greater 
availability  of  the  nuclear  fleet  and  faster  solar  deployment)  together  with  a  lack  of 
flexibility  in  the  electricity  system,  has  contributed  to  more  frequent  negative-price 
hours,  higher  price  volatility,  higher  renewables  curtailment,  and  a  greater  need  for 
nuclear output modulation. France has a largely fossil-free electricity mix and had the 
third  lowest  wholesale  electricity  prices  across  the  EU  in  2025,  making  clean 
electricity  an  economically  attractive  vector  for  decarbonisation.  Yet  a  significant 
electrification  potential  remains  untapped  and  amplifies  the  current  oversupply 
dynamics: the electricity share in France’s final energy consumption is above the EU 
average, but has remained stagnant over the last decade, rising only moderately from 
20%  in  1990  to  26%  in  2024  according  to  the  French  statistical  data  and  studies 
department  (SDES).  In  2024,  electricity  accounted  for  35.4%  and  35.7%  of 
households  and  industry  final  consumption  respectively,  while  its  share  in  transport 
remained low, at 2.5%. Meanwhile, rising curtailment of renewable energy is already 
constraining  renewables  integration,  a  concern  that  will  grow  given  the  expected 
decline  in  nuclear  production  by  2050  and  the  risk  of  other  unplanned  maintenance 
interventions  on  existing  nuclear  power  plants.  Further  progress  in  electrification 
across  sectors  would  therefore  help  to  cost-effectively  decarbonise  the  economy, 
create additional outlets for low-carbon generation, and support the business case for 
renewable  deployment  and  flexibility  solutions.  This  could  be  achieved  by 
implementing  an  electrification  of  end  uses  programme,  with  ambitious  targets  for 
high  emitting  sectors  –  such  as  transport,  heating  and  cooling  in  buildings,  and 
industry. 

(39)  Water scarcity is increasingly constraining economic activity with 24-26% of France’s 
gross output exposed to surface water risks and drought related costs exceeding EUR 5 
billion  in  2022.  The  impact  of  water  scarcity  is  cross-sectorial  and  creates  tensions 
across  water-intensive  sectors  such  as  energy,  agriculture,  industry  and  tourism  in 
most regions. These pressures are further compounded by France’s reliance on water 
for  electricity  production  (hydropower  and  nuclear  cooling),  whose  climate  risks  are 
acknowledged through the third National Climate Change Adaptation Plan (PNACC-
3). Regional disparities further amplify these pressures: intensive agricultural areas are 
affected  by  nitrate  and  pesticide  pollution;  urban  and  industrial  regions  face  high 
demand  combined  with  diverse  pollutants  (including  PFAS  (30)  and  microplastics). 
Access to drinking water and sanitation remains a challenge with a significant annual 
investment  gap of  around EUR 4.6 billion,  particularly  in  outermost  regions,  despite 

30 

Per- and polyfluoroalkyl substances (i.e. synthetic forever chemicals). 

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targeted  investment  programmes  such  as  the  Overseas  Departments  Water  Plan 
(PEDOM). Enhancing national and local water governance is needed to better manage 
competing demands and resolve conflicts across sectors, while addressing investment 
gaps  in  resilient  water  infrastructures,  strengthening  monitoring  and  transparency  of 
water quality, and safeguarding water quality from agricultural and industrial pollution 
in  order  to  reduce  the  economic  impact  of  water  scarcity  and  water  quality 
degradation.  Finally,  these  improvements  should  be  embedded  in  an  integrated 
approach to climate adaptation and resilience. 

(40) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States  take 
action  to  urgently  address  human  capital-related  structural  challenges  in  the  areas  of 
skills  and  education,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed  to  France  can  contribute  to  the  implementation  of  the 
Council Recommendation on human capital in the Union.   

(41)  Despite  significant  improvement,  the  French  employment  rate  remains  low  and 
barriers to employment persist, especially for young workers. Despite efforts to tackle 
youth  unemployment  with  RRF-supported  programmes  such  as  ‘1  jeune,  1  solution’ 
and the ‘Contrat d’engagement jeune’, youth unemployment (19.7% in 2025) and not 
in  education,  employment  or  training  (NEET)  rates  (12.7%  in  2025)  are  rising.  Job 
opportunities  for  youth  are  especially  lacking  in  the  outermost  regions,  rural  areas, 
urban  peripheries  and  territories  undergoing  industrial  transition.  Limited  access  to 
affordable housing and transport further hinders labour market integration, with these 
challenges  being  particularly  acute  in  the  outermost  regions.  Addressing  these 
obstacles,  in  particular  by  improving  the  targeting,  consistency,  and  awareness  of 
existing support schemes, improving access to housing and mobility options and better 
aligning  education  and  training  to  employers’  needs  could  improve  labour  market 
integration, particularly of young people, and reduce labour shortages. 

(42)  The  French  labour  market  also  faces  skills  mismatches,  particularly  in  key  sectors 
such  as  manufacturing,  construction,  social  and  health  care  sectors  in  which 
recruitment  difficulties  persist.  France  has  invested  in  upskilling  and  reskilling 
workers, with the support of the RRF and of the ESF+, leading to a slight increase in 
the number of adults participating in training (49.2% in 2022, against 48.4% in 2016). 
However,  progress  toward  the  2030  target  of  65%  remains  slow,  particularly  among 
low-skilled and older workers. Better alignment of training with labour market needs 
and  stronger  support  for  vulnerable  groups  are  still  needed,  especially  as  cuts  in 
apprenticeship  and  trainings  funding  (31)  may  reduce  participation.  A  lack  of  skilled 
labour,  notably  in  STEM  (science,  technology,  engineering,  and  maths),  is  limiting 
France’s  ability  to  meet  growing  demand  in  technology-driven  sectors.  In  particular, 
ICT  and  industrial  engineers  are  among  the  professions  with  the  strongest  growth 
forecasts, yet, close to 1 in 4 jobs risks to remain vacant due to these skills shortages. 
Enrolment in STEM studies is decreasing and remains below the EU average.  Efforts 
to boost STEM enrolment in upper secondary and tertiary  education, alongside early 
interventions for high-potential learners,  as  well as  strengthening continuous training 
for teachers in STEM fields would help addressing STEM skills gaps in key industries.  

31 

2026 budget, Loi de Finances 2026. 

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(43)  The  French  education  system  is  marked  by  declining  proficiency  in  basic  skills  and 
STEM (32). While PISA scores hover near the EU average, the share of low-achieving 
15-year-olds in science, maths, and reading has increased and exceeds the 2030 target 
of  15%  (33),  particularly  in  mathematics,  where  the  share  of  top  performers  has  also 
regressed. France has also one of the widest socio-economic gaps in the EU (34), with 
socioeconomic  background  remaining  a  stark  predictor  of  educational  outcomes. 
Existing  support  for  low  achievers  remains  insufficiently  targeted  as  70%  of 
disadvantaged  pupils  fall  outside  the  ‘réseaux  d’éducation  prioritaire’  (priority 
education  network)  support  scheme.  Expanding  priority  education  areas,  adopting 
flexible criteria for disadvantaged schools, and leveraging student assessment data to 
tailor  teaching  methods,  could  contribute  to  better  address  individual  needs  and 
improve  students’  performance  in  basic  skills,  starting  from  an  early  age.  However, 
frequent  policy  changes  have  resulted  in  insufficient  time  for  implementation  and 
evaluation  and  reduced  ownership  by  the  teaching  community  and  hampered  the 
effectiveness of reforms.  

(44)  Significant  challenges  persist  in  improving  teachers’  working  conditions  and  the 
quality of their training, undermining the attractiveness of the profession. France faces 
a  declining  pool  of  teaching  candidates  and  rising  attrition  among  permanent  staff. 
Key  contributing  factors  include  inadequate  remuneration  compared  to  the  EU 
average (35),  poor  working  conditions,  limited  professional  recognition,  and  limited 
opportunities  for  mobility  (36)(37).  Moreover,  the  latest  TALIS  survey  reveals  that 
French teachers report lower satisfaction with both initial teacher education (ITE) and 
continuous professional development (CPD) compared to EU peers, with critical gaps 
in  training,  particularly in  emerging  areas  such as AI integration.  Increasing reliance 
on  temporary  teachers  with  lower  levels  of  qualifications  and  experience  and  lower 
access  to  training  could  affect  teaching  quality.  Steps  have  been  taken  to  improve 
teaching conditions, including the 2025 ITE reform, which has already led to a rise in 
exam  applications,  suggesting  a  potential  uptick  in  the  profession’s  attractiveness. 
However,  the  2026  budget  acted  the  suppression  of  4000+  teachers’  posts,  partly 
justified  by  the  demographic  decline  but  also  limiting  opportunities  to  reduce  class 
sizes.  The  2022  CPD  reform  has  yet  to  show  substantial  improvements  in  training 
coverage, accessibility, or quality. There is scope for further measures to better align 
initial and continuous training with the changing needs of all students (38) and provide 
teachers and schools with greater  autonomy (39).  In particular,  the Court of Auditors 

32 
33 

34 
35 

36 
37 

38 

39 

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. 
OECD (2023). PISA 2022 Results (Volume I). 
Teachers’  remuneration  corresponds  to  82%  of  the  salary of  a  tertiary-educated  worker  (EU  average: 
85%) and only 26.6% of teachers are satisfied with their earnings (EU average: 37.3%). OECD, 2025, 
Education at a Glance. 
France Stratégie, 2024, Working in Public Service: The Challenge of Attractiveness. 
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. 

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warns that in practice, head teachers have limited scope to adapt to students’ needs and 
local circumstances (40).  

(45)  While  employment  rates  have  risen,  the  risk  of  poverty  and  social  exclusion  has 
worsened in recent years. A key driver of this trend is the growing prevalence of in-
work  poverty  that  has  surged  in  recent  years,  in  particular  among  the  self-employed 
and households with children. Several factors underpin this rise: involuntary part-time 
and fragmented employment reduce total hours worked, while the number of solo self-
employed (micro-entrepreneurs and platform workers) (41) with very low earnings and 
limited  autonomy  has  risen.  In  addition,  low-wage  traps  and  insufficient  access  to 
training  hamper  career  progression  and  concerns  over  working  conditions  persist, 
including long working hours and a high share of fatal accidents at work. Addressing 
training  opportunities  and 
low-wage 
improving  working  conditions  and  health  and  safety  at  work,  including  for  platform 
workers could help reduce in-work poverty.  

traps,  precarious  employment,  boosting 

(46)  The share of children at risk of poverty and social exclusion  reached 27.5% in 2025, 
much  above  the  rest  of  the  population  (20.8%)  and  the  fifth  highest  rate  in  the  EU. 
This  increase  stems  from  multiple  factors.  Parents  face  difficulties  in  securing 
adequate income from work, as 9.2% of children live in jobless households, one of the 
highest  rates  in  the  EU.  Additionally,  in-work  poverty  has  risen  sharply  among 
households with children, particularly affecting single-parent families, predominantly 
headed by mothers. Among working single parents, one in five were at risk of poverty 
in 2025, due to involuntary part time and missed career opportunities, often for lack of 
adequate  childcare  options.  While  overall  childcare  availability  is  relatively  high  in 
France,  access  remains  deeply  unequal: 
the  gap  between  advantaged  and 
disadvantaged  children  (36  percentage  points)  is  wider  than  the  EU  average  (20 
percentage points).  In 2023,  76% of families living  in  poverty  were unable to afford 
childcare (42). Moreover, concerns remain regarding the quality, availability and cost 
of childcare, which differ widely across the French territory. Territorial disparities in 
job  and  training  opportunities,  in  access  to  affordable  housing,  transport  and  health 
and  social  services  further  hinder  parents’  ability  to  secure  a  living  wage.  These 
challenges  are  compounded  by  the  rising  cost  of  living  that  contributed  to  increase 
severe  material  or  social  deprivation  among  children  (10%  in  2025,  against  7.9%  in 
the  EU),  with  lone  parents  and  large  families  hit  hardest  by  escalating  costs  of 
housing, energy and food (43). Rising homelessness in France (44) increasingly affects 
families with children (45). Meanwhile, child allowances and housing benefits have not 
kept  pace  with  inflation  and  eligibility  criteria  have  tightened.  Reviewing  the 
effectiveness of family and housing benefits, tackling employment barriers for parents, 
improving  access  to  early  childhood  education  and  care  and  reducing  territorial 
disparities in access to services could help reduce child poverty. 

40 

41 

42 

43 
44 
45 

Cour  des  comptes,  Mobiliser  la  communauté  éducative  autour  du  projet  d’établissement,  Rapport 
public thématique, 2023. 
Rapport  pour  la  France.  GDPoweR  –  Récupération  des  données  des  travailleurs  au  service  de  la 
négociation et du suivi des accords collectifs dans l’économie des plateformes. 2025. 
CNAF-ONAPE,  L'accueil  des  jeunes  enfants  -  Édition  2025,  2025,  Observatoire  national  de  la  petite 
enfance (Onape) | CAF – Caisse d’Allocations Familiales. 
INSEE, privation matérielle et sociale en 2025. 
Fondation pour le Logement, ’31ème rapport sur le mal-logement en France en 2026”’ 2026. 
UNICEF-FAS, Baromètre Enfants à la rue, 2025. 

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(47) 

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  2026,  the  Council  recommended  that  the  euro-area  Member  States  take 
action, including through their RRPs, to implement the 2026 Recommendation on the 
economic  policy  of  the  euro  area.  For  France,  the  recommendation  (1)  helps 
implement  the  first,  the  second  and  the  fifth  recommendations  on  the  euro  area, 
recommendation  (2)  helps  implement  the  fourth  recommendation  on  the  euro  area, 
recommendation 
the  eighth  and  ninth 
recommendations on the euro area, recommendation (4) helps implement the seventh 
recommendation  on  the  euro  area  and  the  recommendation  (5)  helps  implement  the 
fifth recommendation on the euro area. 

the  seventh, 

implement 

(3)  helps 

HEREBY RECOMMENDS that France take action in 2026 and 2027 to:  

1. 

2. 

3. 

In  view  of  the  deviation  projected  for  2026  by  the  Commission  vis-à-vis  the 
recommended  net  expenditure  ceiling,  ensure  that  net  expenditure  respects  the 
corrective path recommended by the Council on 21 January 2025. Reinforce defence 
spending  and  readiness  while  ensuring  spending  efficiency  and  gradually  adapting 
the budget to sustain structurally higher defence spending. Ensure that any measures 
taken to  mitigate the impact  of the hike in  energy prices are temporary, targeted  at 
protecting  vulnerable  households  or  at  addressing  the  needs  of  energy-intensive 
firms, preserve incentives for energy savings  while ensuring that their fiscal cost is 
compatible with the commitments under the EU fiscal framework. Implement the set 
of  reforms  and  investments  underpinning  the  extended  adjustment  period  as 
recommended by the Council on 21 January 2025. Ensure the fiscal sustainability of 
the pension system, while taking fairness into account and enhancing its contribution 
to  employment  and  potential  growth.  Rely  on  the  outcome  of  spending  reviews  to 
reduce  public  spending  in  a  lasting  and  significant  manner  and  improve  its 
to  consumption  and 
efficiency.  Shift 
environmental  taxes,  while  rationalising  and  reducing  fiscal  and  social  tax 
expenditures.  Reduce  administrative  complexity  by  eliminating  overlapping 
competences,  thereby  improving  spending  efficiency.  Strengthen  administrative 
capacity and spatial planning in the outermost regions. 

taxes  away  from  production  factors 

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes  building,  where  appropriate,  on  the  reallocation  to  strategic  priorities 
and flexibilities in the mid-term review of the cohesion policy framework.  

Further  simplify  national  regulation,  reduce  administrative  burden,  and  regulatory 
restrictions on firms, in particular in  construction and the services sector and tackle 
barriers  to  free  movement  of  goods.  Strengthen  business  R&D  intensity  by  better 
targeting  public  support  schemes  that  incentivise  business  R&D  and  promote 
diffusion  of  innovation,  by  sustaining  public  support  through  a  multiannual 
investment  plan  and  encouraging  equity  investment  by  institutional  and  retail 
investors,  in  particular  funding  support  for  scale-ups  and  for  disruptive  innovation. 
Make  the  ecosystems  that  support  collaboration  between  academia  and  businesses 
the 
Improve  SME  digitalisation, 
more  effective. 
effectiveness  of  existing  public  support  measures.  Continue 
to  promote 
diversification and employment in regions affected by industrial transition. 

including  by 

improving 

4. 

Accelerate  the  decarbonisation  of  the  transport  sector  by  removing  barriers  and 
providing  incentives  to  increase  the  demand  and  supply  of  low-emission  transport 

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modes  and  vehicles.  Boost  energy  efficiency  of  buildings  and  reduce  reliance  on 
fossil  fuels  by  ensuring  stable  and  predictable  support  with  particular  focus  on 
ambitious  renovations  and  vulnerable  households.  Accelerate  the  deployment  of 
renewable  energy  projects  including  by  further  streamlining  permitting  procedures. 
Promote  demand-side  flexibility  and  storage  technologies,  and  ensure  sufficient 
investment  in  electricity  grid  capacity  and  in  cross-border  interconnections. 
Accelerate  electrification  of  end  uses  focusing  on  high  emitting  sectors.  Improve 
water  management  to  better  address  competing  demands  between  water-intensive 
sectors  and  ensure  adequate  investments  in  water  infrastructure,  particularly  in  the 
outermost  regions,  and  safeguard  water  quality  from  agricultural  and  industrial 
pollution. 

Address  skills  shortages,  by  aligning  training  to  labour  market  needs,  including  at 
territorial  level,  and  boosting  enrolment  in  science,  technology,  engineering  and 
maths (STEM) subjects. Increase labour market integration, by removing barriers to 
education and employment for young people and by expanding access to training for 
low-skilled  and  older  workers.  Improve  educational  outcomes  and  reduce 
inequalities in education. Strengthen the teaching profession, including by improving 
working  conditions  and  initial  and  continuous  training  of  teachers.  Prevent  and 
reduce  in-work  poverty  and  child  poverty,  by  removing  barriers  to  gainful  and 
sustainable  employment,  notably  for  parents,  by  improving  access  to  quality  early 
childhood  education  and  care  for  the  most  disadvantaged  households,  and  by 
reducing territorial disparities in access to services, notably health care.  

5. 

Done at Brussels, 

For the Council 
The President 

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