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French government unveils austerity budget for 2027

French government unveils austerity budget for 2027

The French government led by Prime Minister Sébastien Lecornu presented a draft state budget for 2027 and a social security budget to the Council of Ministers on Thursday, October 1. The cabinet wants to significantly reduce the deficit and, according to the proposal, plans to save 43 billion euros next year. ORF ↗

The social security budget is meant to reduce the deficit of its individual sectors to 12.7 billion euros, representing roughly a halving of the current level. Pensioners, the insured, and healthcare workers are all expected to contribute to achieving this goal. Le Monde ↗

Proposed measures include freezing family allowances, decoupling pension indexation from price trends, and a ten-percent reduction in a tax relief. The government is also counting on freezing basic pensions and the public sector pay scale. The measures are set to affect several segments of the population, and their adoption could prove politically contentious. Le Figaro ↗

The proposal is emerging in a tense economic and political environment. France is facing a growing deficit, record debt, and the absence of a stable parliamentary majority. The cabinet must therefore reckon with pressure from opposition parties as well as the attention of financial markets as it pushes the budget through. France24 ↗

Parliamentary deliberation on both budget bills will be one of the biggest political tests for the government in the final budget year of President Emmanuel Macron's term. The final shape of the austerity measures will be determined by the further legislative process. Le Monde ↗

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