Draft budget in France: austerity measures and wage freeze planned

The draft budget was presented to the cabinet in the morning. Prime Minister Sébastien Lecornu had already promised savings totaling 54 billion euros. This total also includes measures that were already initiated in the current year. The aim is to reduce the deficit from 5.4 to five percent of gross domestic product next year.

Wage freeze for public sector employees

Specifically, it is proposed to freeze public sector salaries and most pensions. In addition, municipal budgets and health care costs are to be cut and tax breaks for companies are to be reduced. However, a broad-based tax increase for households and companies is not planned. "This budget enables us to get back on track for consolidation through a significant effort," said Finance Minister Roland Lescure.

The draft budget also provides for new tuition fees for certain degrees or preparatory classes. The CGT union leader Sophie Binet called the fees a “provocation” in view of the current school and student protests.

The budget is scheduled to be debated in the National Assembly in the fall. In this context, the government could face renewed votes of no confidence and further protests among the population. There have already been numerous demonstrations and strikes in public services this week.

The government expects total debt to amount to 119.3 percent of gross domestic product next year. The interest burden this year amounts to almost 80 billion euros, significantly more than the budget of the Ministry of Education. Interest rates on 10-year government bonds rose to 4.9 percent on Thursday - a high since 2002.