France’s efforts to tackle its long-standing budget deficit by 2029 have received approval from EU finance ministers. However, Prime Minister François Bayrou faces significant political obstacles as he attempts to implement the plan and avoid the fate of his predecessor.
France Pledges Reforms to Address Eurozone’s Largest Budget Deficit
France’s budget deficit, which ballooned to 6.2% of its GDP in 2024, remains the highest in the eurozone. EU rules require member states to maintain deficits under 3%. To address this, France has committed to wide-ranging reforms, including changes to unemployment insurance, pension systems, and investments in renewable energy.
The EU Council on Tuesday approved a multi-year strategy for France and other high-deficit nations, including Belgium, Italy, and Poland, to reduce fiscal imbalances. EU Economics Commissioner Valdis Dombrovskis noted that France’s approach is less aggressive than previous plans but still ambitious.
Brussels reintroduced stricter fiscal rules following their suspension during the Covid-19 pandemic. However, the updated rules offer more flexibility, allowing countries to design gradual reform strategies.
Bayrou Struggles to Navigate Political Challenges
Prime Minister Bayrou faces political tension as he seeks to balance fiscal reforms with appeasing lawmakers. Without a legislative majority, President Emmanuel Macron’s party relies on alliances with either left-leaning or far-right groups to pass legislation.
Recent compromises have already softened the original plan, which proposed €40 billion in spending cuts. Last week, Bayrou survived a no-confidence vote by promising to renegotiate Macron’s controversial pension reforms and reversing plans to eliminate 4,000 public education jobs.
The shadow of Bayrou’s predecessor, Michel Barnier, looms large. Barnier’s government collapsed in December after just three months, following disputes over austerity measures. Antoine Armand, Barnier’s finance minister, was replaced by Eric Lombard, a former banker with experience at BNP Paribas and Generali.
Lombard attended his first EU finance ministers’ meeting in Brussels this week. Following the session, he expressed gratitude for EU support, emphasizing that the reforms would require shared effort but are essential for France’s future.
