Issued on: 15/07/2025 - 07:51

2 min Reading time

France’s public debt – the total amount it owes – has soared to around €3.3 trillion, and it will pay out €67 billion on interest payments alone this year.

The country's budget deficit meanwhile remains stubbornly high at about 6 percent of GDP in 2024.

The government aims to reduce the deficit to 4.6 percent by 2026, to edge nearer to the EU's ceiling of 3 percent.

Reaching those goals means France has to find at least €40 billion in savings in a single year.

“We will not allow the deficit to accumulate,” Bayrou said in a television interview on Thursday. "For the first time in a very long time ... the government is going to say what the constraints are, what efforts are needed, and what decisions we have to take to get us out of this deadly trap."

France faces €5bn in fresh cuts as debt balloons to record high

Though the precise ways of achieving those savings have not been made public, Bayrou said "everyone would have to contribute to the effort".

The proposed routes include: reducing the scope of some existing tax breaks; freezing the value of certain state benefits that are typically adjusted for inflation;  raising taxes on retirees, and further cuts to public services and local government budgets.

The government's favoured option is a ‘blank year’ whereby spending in 2025 will be carried over to 2026 at the same level, without taking inflation into account, thereby saving money. 

All the above options risk upsetting a part of the population and therefore voters as France prepares for local elections in 2026 and presidential polls in 2027.

France is already feeling the pinch after a controversial budget for 2025 containing €53 billion in spending cuts and tax increases was passed in February.

The government lacks a clear majority in parliament and now faces fierce opposition with left-wing lawmakers opposed to any further spending cuts and the right against increases in taxation.

Seven Nobel laureates urge France to adopt tax on 'ultra-rich'

Bayrou is expected to resort to using a constitutional tool that allows legislation to be passed without a vote in parliament.

But this could trigger a vote of no confidence and lead to the government's ouster, as was the case for his predecessor Michel Barnier in December 2024.

Bayrou has escaped such a vote so far, thanks largely to the Socialist party which agreed not to oppose the 2025 budget in return for government promises to launch talks on pension reform.

Those negotiations collapsed last month and the prime minister can no longer count on the support of the centre-left.

Meanwhile the far-right National Rally, which has declined to help topple the government so far, has suggested it could do so when Bayrou presents the full budget in the Autumn.

President Macron further complicated Bayrou's equation on Sunday, calling for an additional €6.5 billion to be spent on defence over the next two years to face unprecedented threats from Russia, terrorism and online attacks.