French economy faces contraction and payment delays

The French economy is facing significant headwinds as new data reveals both a contraction in private sector activity and a severe liquidity crisis for small businesses.

According to the 2025 report from the Payment Terms Observatory, late payments have drained €13 billion in cash flow from very small, small, and medium-sized enterprises (VSEs/SMEs) during 2024. The report highlights a decline in payment discipline among large companies, with only 48% adhering to legal deadlines. The public sector also contributes to the issue; 15% of local authority expenditures exceed the 30-day regulatory limit, while the public hospital sector faces critical delays averaging 71.3 days nationally and 130.6 days in overseas territories.

Simultaneously, S&P Global preliminary data indicates that French private sector activity contracted in October 2026. The composite PMI fell to 48.4 points from 51.1 in September, signaling a downturn in both the services and manufacturing sectors. This decline is driven by weakening demand, financial tensions, and political uncertainty, with new orders for goods and services decreasing at their fastest rate since May.