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France must break its decades-long habit of spending beyond its means, including by working more and improving the efficiency of public services, said Prime Minister François Bayrou.
“It’s a vicious circle, a dangerous trap, potentially irreversible, that must be identified and whose full implications we must share with the French people,” Bayrou said of France’s chronic deficits during a press conference on Tuesday. “This risk is politically untenable. But more profoundly, it is morally unacceptable.”
The centrist prime minister, allied with President Emmanuel Macron, has made cleaning up France’s degraded public finances a priority, but he risks being toppled by the opposition if they are angered by the pain stemming from budget cuts.
Gridlock has worsened since Macron called snap elections last summer, only to lose them and face a National Assembly fractured into three similar-sized blocs.
Since Macron’s centrists and their allies, including Bayrou’s party, no longer have a majority in parliament, they will have to use a constitutional clause to override lawmakers to pass the 2026 budget. This then opens them up to a no-confidence vote. Such a move led to the ousting of Bayrou’s predecessor Michel Barnier last year.
France’s interest costs this year will reach about €62bn, roughly equal to annual combined spending on defence and education, excluding pensions, and those costs would climb to around €100bn by 2029 if nothing were done. If France were to be downgraded by rating agencies or investors became less willing to buy its government bonds, borrowing costs could rise further, Bayrou said.
On Sunday, finance minister Eric Lombard warned that an additional fiscal package of €40bn would be needed for 2026 for France to reach its goal of cutting the budget deficit to 4.6 per cent of national output from 5.4 per cent at the end of 2024. The 2025 budget included tax rises and spending cuts of €50bn.
The effort will be made harder since French growth is slowing and unemployment is rising. The Bank of France has lowered its annual growth target for this year to 0.7 per cent from 0.9 per cent, given a stagnant economy in Europe and the risk of a global trade war triggered by Donald Trump.
The government said that it planned to propose cuts to social spending, such as ending tax breaks to pensioners and healthcare and reducing the spiralling costs of medical leave.
Social spending accounts for half of all government spending, and is the hardest to cut since it angers voters. Other measures will include a new mechanism to prevent rich people from avoiding tax, although it will not restore the wealth tax that was in effect until 2017. A temporary tax on big companies in effect this year is set to be scrapped.
“If French people say no to these actions, then we will be heading to a crisis,” said Bayrou. If no reforms were enacted, then there would be little margin to spend on priorities such as defence spending and fighting climate change.
On defence in particular, Macron has called for higher spending in the coming years to face security challenges from Russia and the possible reduction of US military support for Europe. But Bayrou on Tuesday only committed to sticking to already planned rises through 2030.
The government is working on the 2026 budget now, and plans to have a draft proposal by mid-July, several months earlier than usual.
Whether Bayrou can survive a no-confidence vote on the budget in the autumn will depend on the position of the Socialist party, a key swing voting bloc in the assembly, as well as that of the far right led by Marine Le Pen.
Sebastien Chenu, a lawmaker in the far-right Rassemblement National party, told Europe 1/CNews on Monday that the group could vote to topple the government if its budget weighed too heavily on working people.
“Constructing a budget that asks French people to tighten their belts . . . exposes them to a no-confidence motion from us,” Chenu said.
France remains far above the 3 per cent of GDP deficit ceiling set by the EU, and is among the worst performers in the region. It is aiming to get back to 3 per cent of GDP by 2029. But Brussels has put it on a watchlist of countries with excessive deficits and it will be monitoring closely to see whether France delivers.
