(Bloomberg) -- The Bank of France cut its growth forecasts for the next two years as it included higher assumptions for energy prices and a hit to activity from spending cuts to close down the budget deficit. 

While the economic expansion will pick up as lower inflation buoys household spending, the acceleration will be smaller than the central bank previously expected in March. In the shorter term, it also said a monthly survey of businesses indicates only “very slight” growth of between 0% and 0.1% in the second quarter of this year. 

The outlook for France’s economy is another challenge for Emmanuel Macron as he heads into snap legislative elections he called after his party suffered a crushing defeat in last weekend’s vote for the European Parliament. 

The economy and public finances are set to be a key battleground as Macron’s nationalist nemesis Marine Le Pen has latched on to concerns over his economic reforms and household incomes to bolster her popularity. Her National Rally party won 31% of the EU election vote in France, more than twice the share of Macron’s group. 

Weaker growth has already hurt Macron’s government, undermining plans to reduce the deficit and forcing ministers to find an additional €20 billion ($21.5 billion) of cost savings this year. Le Pen has said those plans would amount to an unjust social and fiscal “purge” in France. 

The Bank of France said uncertainty over fiscal consolidation is a risk to its forecasts as measures in the current government’s long-term program are not detailed and different savings can have different effects on growth.  

The central bank made no changes to its forecasts for the main gage of inflation, which it expects to ease to 1.7% from next year. For inflation excluding energy and food, it raised the forecast this year by 0.1 percentage points to 2.5%. 

“Our central scenario remains a gradual exit from inflation without recession, allowing for a clearer recovery in growth in 2025 and 2026,” the Bank of France said. 

©2024 Bloomberg L.P.