The financial crisis did not spare the French economy, which is facing a deep recession in 2009, even if the situation is less severe than elsewhere. After a clear drop in the fourth quarter of 2008, economic activity will most likely continue to contract throughout this year. Both the timing and the strength of recovery remain uncertain, primarily because of the risks surrounding the balance sheets of financial institutions. While French banks have been weakened by the crisis, they are not as shaky as their counterparts in many other countries. Moreover, the risk that the real estate market correction now underway will accentuate the decline in economic activity is attenuated to some extent by the low rate of household indebtedness and the weakness of the wealth effect on consumption. The crisis will leave public finances in poor shape, and once the recovery begins, a priority will be to phase out the general government budget deficit. Given the already very heavy burden of taxes and compulsory contributions, public finance consolidation will require strict control over expenditures. This chapter reviews the latest macroeconomic developments, including those on the fiscal policy front, and discusses priorities for restoring health to public finances.