France is counting on long-term investments, particularly from US companies in data centres, to help offset an economic slowdown caused by the fallout from the Middle East conflict, finance minister Roland Lescure said.

“The French economy was pretty strong getting into that crisis, we have a bit of a slowdown in the short run but again what we are doing is investment,” Lescure told Bloomberg Television. “At the moment when someone wants to put a data centre somewhere, not in the US, they look at France because we have carbon-free, ample and cheap electricity.”

Last week Lescure said that the Iran war had only a “relatively moderate” effect on France’s economy, with activity likely to stay broadly in line with the government’s forecast of 1% growth in 2026.

A Bank of France business survey released on Monday also indicated the economy remained resilient in March, with growth potentially picking up to around 0.3% in the first quarter.

However, the outlook has since weakened, as confidence indicators have fallen and both households and businesses anticipate rising inflation, Bloomberg reports.

“Short-term resilience, but a bit of a risk, long term we need to invest in the future, that’s the only way out - growth is the way out,” Lescure said.

That said, Lescure added that the French government will need to narrow its investment focus to key areas such as defence, energy, and the transition to electric power. He added that this will require cuts elsewhere, including in health and pension spending, as France continues to grapple with a large budget deficit.

Since the 2024 election left parliament divided, lawmakers have repeatedly brought down governments over proposed spending cuts, triggering sell-offs in French sovereign bonds.

Lescure said he expects the country will once again “muddle through” and pass a budget later this year, but warned that the outlook beyond the presidential elections in April remains uncertain.

President Emmanuel Macron is ineligible to run again after completing two five-year terms, and current polls show that potential successors from his centrist camp are lagging behind likely candidates from the far right.

Moreover, last week, Moody's Ratings warned of “significant risks” that no agreement will be reached on fiscal consolidation from 2027 onward, adding that political fragmentation could lead to a lasting rollback of structural reforms aimed at boosting growth and stabilising public finances.

Lescure said presidential candidates will have to decide whether to prioritise sovereignty, defence, and investment in electricity and energy to strengthen France and Europe, “or do we still want to be stuck in the past of things we have to change and reform?”