France’s ambitious plan to reduce its budget deficit by 2029 has gained support from EU finance ministers. However, Prime Minister François Bayrou faces significant political hurdles to avoid the fate of his predecessor, Michel Barnier, who stepped down following a cost-cutting dispute.
France Commits to Fiscal Reform Despite Political Risks
France has one of the largest and most persistent budget deficits in the eurozone. In 2024, the country’s deficit reached 6.2% of its GDP, the highest in the eurozone and well above the EU’s 3% target. The new budget plan aims to bring the deficit under control through structural reforms, including changes to unemployment insurance, pensions, and investments in renewable energy.
“France maintains a level of ambition over a seven-year period, albeit in a less frontloaded way,” noted EU Economics Commissioner Valdis Dombrovskis, comparing the new proposals to those of the short-lived Barnier administration.
The EU Council also agreed on similar deficit-reduction strategies for Belgium, Italy, Malta, Poland, Slovakia, and Romania, reflecting Brussels’ reintroduction of fiscal rules with greater flexibility following the Covid-19 pandemic.
Bayrou’s Balancing Act
Despite EU approval, Bayrou must navigate a deeply divided political landscape. Without a legislative majority, President Emmanuel Macron’s party will need alliances with either the left or the far-right to pass reforms. Recent concessions have softened the impact of the original plan, which proposed €40 billion in spending cuts.
Last week, Bayrou survived a no-confidence vote after promising to renegotiate Macron’s unpopular pension reforms and reversing plans to eliminate 4,000 public education jobs.
The collapse of Barnier’s government last December, after just three months in office, underscores the political volatility surrounding budgetary reforms. Barnier’s finance minister, Antoine Armand, was replaced by Eric Lombard, a banker with experience at BNP Paribas and Generali. Lombard made his first official appearance in Brussels on Monday and Tuesday, where he secured support for the new budget.
Speaking after the meeting, Lombard thanked EU ministers for their backing. He emphasized that the proposed budget would require sacrifices but insisted that it serves France’s long-term interests.