Budget: the savings puzzle
Case
Prime Minister François Bayrou unveiled the broad outlines of the 2026 budget on Tuesday, July 15th. This represents a financial and political headache, as it includes a significant $40 billion cut in savings, in addition to increasing the military budget. The objective: to reduce the deficit to 4.6% of GDP next year, compared to 5.8% in 2024. All this takes place in a volatile and uncertain international context, between trade and military tensions. Politically, the Prime Minister's support base appears more fragile than ever. And everyone on the political scene, starting with the National Rally, which has positioned itself as the arbiter of censure, is drawing its red lines, after overthrowing the Barnier government last fall over the budget.
As Prime Minister François Bayrou is due to present his 2026 budget this Tuesday, the proposed avenues for achieving $40 billion in savings may not satisfy anyone. In the interest of fairness, the head of government could consider raising taxes on the wealthiest.
Patrick Martin, president of the employers' union Medef, has warned of the economic situation, stating that 84% of his members are "worried." The reason? The economic outlook and the government's 2025 budget.
RMC
