Business confidence in France unexpectedly dropped by one point in November, reaching 96, with services experiencing a two-point decline.

Meanwhile, in manufacturing, sentiment improved by four points to 97, recovering only partially from the steep drop in October, and still staying below the long-term average of 100 for the seventh month in a row.

The data released by France’s statistics agency Insee on Thursday adds to growing concerns from other surveys, highlighting ongoing uncertainty and delays in investment projects, Bloomberg reports.

French business confidence has been in decline since President Emmanuel Macron’s unexpected dissolution of the National Assembly in June, which resulted in elections that produced no clear majority. 

It took the president two months to form a minority government, which is now working to pass an austere budget through a divided parliament.

Plans for tax hikes and spending cuts have faced strong criticism from corporations, who argue that these measures could undo years of Macron’s pro-business policies that have fostered job creation and investment.

Patrick Martin, head of the business group Medef, told Le Parisien newspaper on Sunday that the fiscal proposals, which include temporary tax increases for the largest companies, are “recessive.” 

Business investment was already on the decline before the political challenges emerged and is expected to continue contracting at least until the end of the year, according to Insee’s latest projections.

Furthermore, earlier this week, consultancy firm EY released a report revealing that 49% of foreign investors in France had scaled back or postponed their plans following the elections. The primary reason cited was legislative and regulatory uncertainty, followed by concerns over a slower pace of economic reforms.

The investment slowdown is also starting to impact employment, with several companies, including retailer Auchan and telemarketing firm Teleperformance, announcing job cuts in recent weeks. Unemployment rose slightly in the third quarter, reaching 7.4%.

Insee’s overall confidence index revealed declines in construction, services, retail, and wholesale sectors, which offset the partial recovery in industry. In manufacturing, most sub-indicators showed improvement, with the exception of the general production outlook.