France's new government will on Thursday deliver its 2025 budget, with plans for €60 billion worth of tax hikes and spending cuts to tackle a spiralling fiscal deficit. But without a majority, Prime Minister Michel Barnier will likely need to make concessions to avoid a veto from opposition parties.
"This will be a difficult, serious and responsible budget," Barnier said on Tuesday after surviving a no-confidence motion proposed by left-wing MPs, which the right-wing National Rally (RN) did not vote for.
Barnier's new government is under increasing pressure from financial markets and France's European Union partners to take action after tax revenues fell far short of expectations this year and spending exceeded them.
Financial markets are likely to pay close attention to whether the budget can get through parliament without being watered down too much.
The budget will also face scrutiny from the European Commission, which has subjected France to an excessive deficit procedure for falling foul of the EU's fiscal rules.
But the budget squeeze, equivalent to two points of national output, has to be carefully calibrated to placate opposition parties, who could not only veto the budget bill but also band together and topple the government with a no-confidence motion.
Lacking a majority by a sizeable margin, Barnier and his allies in President Emmanuel Macron's camp will have little choice but to accept numerous concessions to get the budget bill passed, which is unlikely before mid to late December.
The far-right National Rally, whose tacit support Barnier needs to survive any no-confidence motion, has already helped derail a government proposal to postpone a pension increase by six months to save €4 billion.
Members of Macron's party are also loathe to see the president's legacy of tax-cutting go up in smoke, with his former prime minister Gabriel Attal saying on Wednesday: "The budget is light on reforms and too heavy on taxes."
EU hails 'promising' initial budget talks with France
Electricity levy
Barnier has said he will spare the middle class and instead target big companies with a temporary surtax and people earning over half a million euros per year.
All taxpayers will nonetheless be hit by plans to restore a levy on electricity consumption to where it was before an emergency reduction during the 2022-2023 energy price crisis.
The government has said the budget bill will reduce the public deficit to 5 percent of gross domestic product (GDP) next year from 6.1 percent this year – higher than almost all other European countries – as a first step towards bringing the shortfall into line with an EU limit of 3 percent in 2029.
While tax hikes will make up one third of the 60 billion euro budget savings, the rest will come from spending cuts, with 20 billion cutting across France's ministries and the rest hitting separate spending on welfare, health, pension and local government budgets.
Former interior minister Gérald Darmanin has even suggested that civil servants work 37 hours at instead of 35 and remove a public holiday from the calendar.
French government survives no-confidence vote as far right stays neutral
'Penny-pinching'
However, opposition parties have already begun to criticise the draft budget, with the left-wing calling it "harmful to public services", while the National Rally accused the government of stubbornly refusing to change course.
Aurélie Trouvé, MP with the far-left France Unbowed party (La France Insoumise) and president of the commission of economic affairs of the National Assembly, told France Inter radio that the government's draft budget "is a disaster for the daily life of the French and also for the economy because it will lead to a recession".
Socialist Party secretary Olivier Faure, for his part, regretted that the tax effort requested from richer people and big businesses is only temporary.
"We are on a trajectory which is not at all a trajectory for the richest. It is a trajectory for everyone else, and it won't be temporary," he told Franceinfo.
RN deputy Philippe Ballard told Reuters news agency that the savings were "unimaginary" and akin to "penny-pinching".
On 3 October 3 Barnier told public broadcaster France 2 that he wouldn't hesitate to act with a heavy hand if necessary.
"I would like it to be adopted by the parliament," he said. "But if we don't succeed, we will use 49.3, which is a tool of the constitution".
The budget debate, which begins Friday morning, promises to be lively.
(with newswires)
