Budget policy | France takes a short step

French Prime Minister François Bayrou presented the draft budget for 2026 at a press conference last week. The focus was on the need, discussed for weeks, to find savings opportunities totaling €40 billion to avoid ever-increasing national debt. The draft budget presented by the prime minister actually includes cuts of €43.8 billion.

France is accustomed to living off public spending and has "forgotten that you first have to earn what you want to spend," the head of government explained in his opening remarks. He recalled the sovereign debt crisis in Greece years ago and its drastic consequences for the population. He wanted to spare France, which is currently among the laggards in Europe, that experience, Bayrou emphasized. His goal is to reduce the deficit, which was 5.8 percent of gross domestic product last year, to 5.4 percent this year and to 4.6 percent next year.

After that, it is to be gradually reduced further until it finally reaches 2.9 percent in 2029, thus returning to the EU framework. To achieve this, two public holidays are to be abolished, and work on these days is to be freed for the benefit of the state treasury. With the exception of the military budget , which is being increased in light of the supposedly threatening international situation, all public spending is to be frozen next year. No new civil servants will be hired, and one in three retiring officials will not be replaced.

Social assistance and pensions will also be frozen, which alone will save 7.1 billion euros. The general 10 percent tax exemption for pensioners is to be abolished and replaced by a flat rate of 2,000 euros. This measure would benefit pensioners with the smallest pensions.

Above all, five billion euros are to be saved in state health insurance expenditures. Private supplementary health insurance funds will cover part of this, but their contributions will continue to rise as a result. For example, 100 percent reimbursement for medications for long-term patients – such as cancer patients – will be phased out once these patients are "on the road to recovery." To reduce costs, there will also be a more stringent crackdown on unjustified sick notes.

Bayrou also announced plans to take tougher action against tax evasion. However, this was the only time that the highest-income French citizens were even hinted at. However, the head of government once again categorically ruled out the reintroduction of the "wealth tax" (ISF), which President Emmanuel Macron abolished in 2017.

"Bayrou is clearly taking a chainsaw approach to spending on the most socially disadvantaged French people," explained Sophie Binet, general secretary of the CGT union. "This means that we're not facing a 'white year,' as he calls it because of the cuts, but a black year for working people, young people entering the workforce, and retirees. They're losing out three times over, because they'll have to work more, earn less, and lose social benefits."

Like the unions, the left-wing parties and the far-right Rassemblement National (RN) strongly oppose the austerity plans. The right-wing opposition Republicans, which occasionally supports the government, will not support Bayrou's austerity plans and is particularly opposed to the abolition of two public holidays. It is already becoming apparent that in October, when the budget bill is debated in parliament, the left-wing parties and the RN will introduce motions of no confidence. Based on current circumstances, this could bring down Prime Minister Bayrou and his government.