France's Prime Minister Sébastien Lecornu is set to present the country's 2027 draft budget on Thursday, a plan that aims to rein in a public deficit that has ballooned to one of the highest in the European Union. The government, which lacks a clear parliamentary majority, faces a difficult political battle to push the measures through a fragmented National Assembly.
The budget outlines savings of around €54 billion, achieved through cuts to pensions, a freeze on public-sector salaries, and changes to state-funded sick leave. In an interview with Le Figaro on 17 September, Lecornu warned that without such measures, the deficit could approach 6.5% of GDP in 2027, against a government target of 5%. He also noted that rising interest rates and geopolitical tensions would require an additional €10 billion next year.
Record debt and investor unease
France's public debt has climbed to a record 119% of GDP, a level that has unsettled investors and become a defining issue ahead of next year's presidential election. The country last balanced its budget in 1973, and years of near-zero interest rates had kept the debt manageable, but the current environment of higher borrowing costs has changed the calculus.
The government is also considering measures to curb pension costs, including limiting indexation and reducing the tax deduction available to retirees. A reduction in the 10% tax deduction ceiling is expected to generate an additional €1.4 billion for the state.
Political parties on the left and trade unions have accused the government of implementing austerity. Arthur Delaporte, spokesperson for the Socialist Party (PS), described the proposed budget as a “bitter austerity potion” and argued it contradicted Lecornu's stated commitment to compromise.
On Tuesday, trade unions across France called a strike ahead of the budget announcement, particularly over pay freezes for public-sector workers. The protests reflect broader discontent with the government's fiscal approach, which some see as a departure from the country's tradition of a generous welfare state.
The budget's passage is far from assured. The government will need to negotiate with various parliamentary groups, and the process is likely to be arduous. The deadline for formal submission to the National Assembly is 6 October, but the political landscape remains uncertain.
France's fiscal challenges are not isolated. Across the EU, several member states are grappling with high debt levels and pressure to consolidate, as seen in the demands from six frugal states for deeper cuts to the EU's next long-term budget. The situation in France, however, is particularly acute given its size and influence within the bloc.
As the government prepares to unveil its plan, the coming weeks will test its ability to navigate a divided parliament and public opposition. The outcome will have significant implications for France's economic stability and its role in European fiscal policy.
