PARIS ― France is looking at slashing at least €4 billion in spending this year to keep its public finances under control.
With France’s economic outlook for the year deteriorating as a result of the war in the Middle East, the government is looking for ways to make sure its budget deficit — the gap between what it collects in taxes and what it spends — doesn’t exceed 5 percent of gross domestic product, as Paris envisioned when it passed its 2026 budget. The French government is also trying to keep its promise to get that figure down to 3 percent of GDP, as required by EU rules, by 2029.
But those fiscal plans didn’t take into account how the conflict is impacting the French economy. Budget Minister David Amiel said earlier this month that with borrowing costs rising, servicing French debt will cost taxpayers an additional €300 million a month.
To offset those unexpected outlays, the government plans to freeze €4 billion worth of expenditures this year and later reassess if the country can afford those costs, French business daily Les Echos reported Friday. It is unclear whether the freeze will hit all spending across the board or will be concentrated in certain ministries.
“These €4 billion are directly linked to rising costs resulting from higher interest rates,” French Economy Minister Roland Lescure told French daily Le Parisien on Monday.
When asked about the plans, the French economy ministry referred POLITICO to Lescure’s quote in Le Parisien.
The government is expected to share more details on the economic impact of the U.S.-Israeli war against Iran and ensuing energy crisis with key ministers, lawmakers, and local representatives on Tuesday morning. Paris is also expected to send updated spending plans to the European Commission by the end of the month.
Earlier this month, the economy ministry said it expects the conflict to negatively impact growth and inflation, resulting in less tax income filling state coffers.
Despite the drop in tax revenue, the government is digging into its pockets to help businesses and households hard-hit by the crisis, spending at least €130 million.
On top of the existing financial support to low-income households to pay their energy bills via a so-called “energy check,” the government is doling out €70 million in fuel subsidies to the most-affected sectors this month. French Prime Minister Sébastien Lecornu said Friday the government was planning more subsidies for May.
While Lecornu’s government is trying to rein in France’s massive debt this year and is already working on the 2027 budget, potential candidates for next year’s presidential election are already floating their own proposals.
Former Socialist President François Hollande, for instance, urged Lecornu to negotiate the 2027 budget with other parties early on and then pass it via Article 49.3 of the constitution, a clause that allows the government to bypass a parliamentary vote to pass legislation but which opposition parties can respond to by putting forward no-confidence motions.
