About two weeks ago, France's Finance Minister Roland Lescure presented the draft budget for 2027. His description of the French budget situation could - to put it kindly - be described as an "understatement". The 2027 fiscal year follows one that was also difficult, Lescure said.
According to official figures, France's debt ratio this year is almost 120 percent of economic output. Almost 80 billion euros were earmarked in the budget for interest payments on loans alone. The interest rate that France has to pay for ten-year government bonds is now just under five percent.
âFrance has its back against the wall financially,â says Mathieu Plane. The economist teaches at the University of Sciences Po and works for the economic think tank OFCE. "There have been situations in which our budget deficit was higher than five percent - for example during the debt crisis in 2010," says Plane on the television channel France 5. "We got it under control, even if it was difficult. But back then there were political majorities to get it done. Today the question is: Who can do it? And how?"
Less for development policy, more for defense
In its draft budget, the French government is planning ârestructuring measuresâ worth a good 40 billion euros. She particularly wants to cut back on development aid and employment policy. Defense spending, on the other hand, is expected to increase significantly.
The most important principle is to reduce the budget deficit from the current 5.4 to 5.0 percent, explains Finance Minister Lescure. âThis is a very important element, an anchor,â said the politician. "I am counting on all representatives and senators to behave responsibly: in the face of a difficult international situation and major challenges. (...) Let us face this challenge in order to preserve our scope for action."
This is a Herculean fiscal task for the government. And a political balancing act. Because it does not have its own majority in the National Assembly - and Prime Minister SĂ©bastien Lecornu can hardly count on the opposition's willingness to compromise, six months before the presidential election.
Criticism and counter-suggestions from the opposition
Ăric Coquerel is a member of the radical left-wing party LFI and chairman of the budget committee. He criticizes the fact that planned tax increases would primarily affect pensioners and the middle class, while the rich would be spared. âThere is no reason for us as the opposition to support a bad budget law,â says Coquerel. "So we will resist."
The right-wing national Rassemblement National, in turn, presented a counter-proposal to the government's budget last week. Among other things, the RN wants to cut France's contribution to the EU budget, which is currently being negotiated in Brussels, as well as social benefits for migrants. Presidential candidate Marine Le Pen spoke of âradicalâ austerity measures. "We will save a total of 140 billion euros by 2032 - compared to 2026," she said. "I hope that I will not have to tighten this goal if the situation continues to deteriorate before the second round of the presidential election on May 2nd."
Many of the RN's proposals are difficult to implement or have manageable savings effects, emphasize economic experts. According to the High Council of Public Finance, which is part of the French Court of Auditors, the government also based its draft budget on optimistic assumptions: for example, economic growth of one percent and falling interest rates on French government bonds. The political uncertainty and the shaky majorities in parliament are likely to make it even more difficult to implement austerity efforts politically.
