France presents budget with €43 billion in savings — Politico Europe

In France, the government has presented a draft budget for 2027 that provides for €43 billion in savings. The authorities expect to reduce the budget deficit from an anticipated 5.4% of GDP this year to 5% of GDP in 2027, Politico Europe reports.

Measures to reduce the deficit

Economy and Finance Minister Roland Lescure said that France would return to a path of budget consolidation in 2027. The plan includes €9 billion in cuts to public spending, a freeze on pension indexation in line with inflation, and an extension of the temporary tax on large companies. This tax is expected to raise €5 billion.

Prime Minister Sébastien Lecornu said last month that he intended to cut the budget by €54 billion. According to Lescure, decisions already made this year will deliver an additional €11 billion in savings in 2027. France has also committed to increasing its annual contribution to the EU budget by €2.5 billion in line with the bloc's rules.

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Parliamentary support

Following the snap elections of 2024, there is no stable majority in the French parliament, making the adoption of the budget a difficult political process. Two of Lecornu's predecessors lost their posts while trying to push their budget plans through parliament by the end of the year.

Politico's sources among lawmakers suggest that the government is counting on Marine Le Pen's National Rally party not seeking the cabinet's resignation during consideration of the document. Le Pen said last week that she wanted to make changes to the budget, rather than merely block it. At the same time, centrist lawmaker Charles de Courson warned that the party could change its position later.

Yields on French borrowing reached their highest level since 2008, while the spread between yields on 10-year French and German bonds exceeded 130 basis points. According to INSEE, inflation in France stood at 3% in September, while public debt reached a record 119% of GDP at the end of June.