France Economy Weakens as Iran Conflict Hits Growth, Survey Shows

France's economy is showing signs of faltering as the fallout from the Middle East conflict hits growth and ratchets up inflation pressure, according to the central bank's monthly survey of companies.

The Bank of France's survey, released this week, indicates that the Iran-related shock is weighing on business activity and confidence. The conflict has disrupted supply chains and pushed up energy costs, squeezing margins for French firms. The survey points to a slowdown in services and manufacturing, with firms reporting weaker demand and higher input prices. This comes as the European Central Bank continues its tightening cycle, with rate hikes aimed at curbing inflation that is now being exacerbated by geopolitical tensions.

For traders, the weakening French economy raises questions about the ECB's policy path. If growth falters further while inflation remains sticky due to energy shocks, the central bank faces a difficult trade-off. Live rates prices and charts on NowPrice show how eurozone bond yields and the euro are reacting to the data. The next key data point will be the eurozone composite PMI due later this month, which will provide a broader picture of the bloc's health. Markets will also watch for any ECB commentary on the balance of risks between growth and inflation.