French Treasury warns climate inaction could reduce GDP by 3.6% and widen deficit by 2050

Long-term economic projections

A policy note from the French Directorate General of the Treasury, presented on 11 September 2026 by Economy Minister Roland Lescure, sets out macroeconomic estimates for the French economy through the middle of the century. In the absence of additional adaptation measures and emissions reduction policies, climate change is projected to reduce French gross domestic product by 3.6% in 2050. The Treasury identifies two main mechanisms driving this economic loss: a decline in labour productivity caused by rising temperatures and an increase in the rate of capital depreciation. The ministry based its analytical assumptions on climate scenarios developed by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), an international coalition of central banks and financial regulators that establishes common reference frameworks.

Inaction is not an option. Failing to adapt has a cost, but it is also an economic opportunity and a matter of sovereignty.

Deterioration of public finances

Beyond general economic output, the Treasury analysis evaluates the consequences of unmitigated climate disruption on national budgets. The document projects that public inaction will worsen the French fiscal deficit by 1.8 percentage points of GDP by 2050. Without compensatory public spending cuts, this widening deficit will directly increase the state's sovereign debt burden. The final cost to the state will depend on the trajectory of global temperature rise, the effectiveness of national adaptation policies, and future policy decisions regarding how much climate damage is absorbed by the state. The Treasury also notes that mitigating losses will require deploying existing technologies, including protective building designs, and implementing societal decisions such as stricter urban planning regulations that prohibit construction in flood-prone zones.

Maladaptation, wait-and-see attitudes, and inaction would have a cost far higher than adaptation.

Climate impacts and growth slowdown in 2026

The long-term modeling follows direct economic shocks recorded during the summer of 2026, which was the hottest summer ever measured in France. Earlier in September, the French government acknowledged that severe heatwaves and prolonged drought will shave 0.1 percentage points off domestic economic growth in 2026, primarily due to reduced agricultural yields. Alongside the climate report on 11 September, the government revised its annual French GDP growth projection for 2026 down to 0.5%. European institutions reported parallel costs across the European Union. On Thursday in Brussels, UN Climate Executive Secretary Simon Stiell urged European leaders to maintain their clean energy transition commitments, pointing to heavy regional losses from summer extreme weather.

According to a study, the extreme events of this summer will cost Europe 180 billion euros in loss of labor productivity and disruptions in the food, energy and transport sectors. This is equivalent to a one percentage point drop in European GDP, exactly the growth rate forecast for the EU economy.

Ministry working groups and business adaptation

Following an instruction from the Prime Minister to accelerate domestic adaptation planning, the Ministry of the Economy organized a dedicated seminar at Bercy with representatives from key industrial sectors, employer federations, and labor unions. Minister Delegate for Ecological Transition Mathieu Lefèvre joined Lescure at the event to establish specialized working groups focusing on business adaptation and dedicated financing instruments. The initiatives aim to encourage private sector resilience across supply chains and infrastructure before compounding climate events create larger economic losses. The working groups will formulate sector-specific adaptation roadmaps and examine public-private funding models to help businesses adjust to evolving environmental conditions.