France – Bayrou's new budget at a crossroads
The French government wants to reduce it's budget deficit by €44 billion next year, thereby lowering the deficit ratio to 4.6%.
Commerzbank Economic Research
07/16/2025
Francois Bayrou has presented an ambitious budget plan, ...
French Prime Minister Francois Bayrou presented his draft budget for 2026 yesterday. The plan aims to reduce the budget deficit by €44 billion next year and increase defense spending. He is primarily relying on a “blank year” in which government and social spending, such as pensions and civil servant salaries, will be frozen at 2025 levels for the next year. In addition, one in three government employees who retires will not be replaced. Bayrou wants to boost the economy by eliminating two public holidays, among other measures.
It is not entirely clear whether these measures will actually achieve the planned savings of 44 billion. However, if these savings are realized, they should be sufficient to reduce the deficit ratio from the 5.4% expected for this year to the planned 4.6%, despite rising interest payments.
... which could fail due to resistance from other parties
It is highly unlikely that Bayrou will obtain parliamentary approval for his plans. He does not have a majority of his own, and the Socialists and Le Pen's Rassemblement National (RN) appear to reject his plans. He could again invoke Article 49.3 of the French Constitution, which allows the government to pass a budget law without parliamentary approval. However, this would then most likely lead to a vote of no confidence. The probability that Bayrou would survive this has significantly fallen. Unlike two weeks ago, when the Socialists voted no confidence in connection with the pension reform, the RN deputies cannot abstain this time, but could vote against the government, thereby ending Bayrou's term in office.
For full text see attached PDF-Version.
