Political unrest in France has pushed uncertainty in the industrial and construction sectors to heights not seen since the 2022 energy crisis, casting a long shadow over the country’s economic prospects.

The Bank of France’s monthly survey of 8,500 businesses revealed a further rise in uncertainty for these sectors, surpassing the spike seen in June following President Emmanuel Macron’s decision to call snap elections.

Uncertainty in the services sector also increased, though not to a record level for the year.

The fall of Prime Minister Michel Barnier’s government after a no-confidence vote tied to the 2025 budget has left businesses without clarity on future tax and spending policies, Bloomberg reports.

The outgoing administration had proposed steep tax hikes on large corporations and widespread spending cuts to tackle soaring deficits.

However, with the 2025 budget now scrapped and no successor to Prime Minister Michel Barnier yet named, it remains uncertain whether the next government will adopt such stringent fiscal measures.

The Bank of France’s survey, conducted just before the government’s collapse, highlighted growing concerns among business leaders about the country’s political instability and its implications for economic and fiscal policies.

Other surveys have already indicated that France's political turmoil has dampened business and household confidence over the past month.

Despite this, the Bank of France maintained its forecast for economic activity in the year’s final quarter, predicting output will remain steady compared to the previous three months. This period saw a temporary lift from Paris hosting the Olympic Games.

Furthermore, the survey revealed that activity in the services sector increased in November, while construction and industry remained relatively stable. 

Looking ahead to December, business leaders anticipate moderate growth in services, but expect a slight decline in industry and a more significant downturn in construction.