Macron's Final Budget Bill Faces Rocky Road, Aims for €54 Billion in Savings

The French Parliament began deliberating the 2027 budget bill on October 13, and members are struggling with the prospect of voting on unpopular policies ahead of the presidential election, explained Christophe Danet, a France 24 reporter.

The French Parliament is set to begin discussions on this budget bill on October 13, and ahead of the upcoming presidential election, members feel significant pressure to vote on policies that are unpopular with voters.

The French government failed to achieve its 2026 target of a 5% fiscal deficit-to-GDP ratio, with this year's actual deficit expected to be 5.4%, reported journalist Christophe Danet.

The oil crisis, drought, economic slowdown, and rising interest costs are cited as reasons for the widening deficit. With the government aiming to reach a 5% deficit rate by 2027 and a long-term return to 3%, Minister Sébastien Lecornu announced a plan for €54 billion in budget cuts.

While budgets for defense, interior, justice, research, and ecology are protected, reducing the social security deficit, including cuts to drug reimbursements and retiree budgets, is central to this proposal, government officials analyzed.

While budgets for certain ministries such as defense, interior, justice, research, and ecology are protected, the government is considering halving the social security deficit and reducing drug reimbursements and budgets for retirees.

Inflation rose 3% year-over-year in September, and the French economic research institute analyzed that household purchasing power has decreased by €1,200 annually over two years.

With household finances worsening due to unstable prices coupled with rising energy costs, additional austerity measures by the government risk inciting social unrest.

France's 10-year government bond yield reached 4.85%, its highest level since the introduction of the euro, surpassing Greece's 4.44% yield.

The spread with German government bonds has widened to 130 basis points, and France's public debt stands at approximately €360 billion, or 79% of GDP, a post-war high.

Interest costs on government bonds alone amount to €73 billion annually, exceeding the budgets for education and defense, deepening market concerns about France's fiscal health.