The European Union has approved France’s plan to tackle its soaring budget deficit by 2029. However, Prime Minister François Bayrou faces intense political challenges as he works to implement the ambitious reforms.
France Commits to Cutting the Eurozone’s Largest Deficit
France’s budget deficit surged to 6.2% of GDP in 2024, the highest in the eurozone and far above the EU’s 3% target. To address this, France has pledged to undertake significant reforms, including changes to unemployment insurance, pension systems, and renewable energy policies.
The EU Council on Tuesday approved France’s multi-year strategy to reduce its deficit, alongside similar plans for Belgium, Italy, and other high-deficit nations. Brussels has reintroduced its fiscal rules, which were suspended during the Covid-19 pandemic but have been adjusted to allow more flexibility for member states.
EU Economics Commissioner Valdis Dombrovskis described France’s plan as ambitious, though less frontloaded than proposals made under former Prime Minister Michel Barnier. These reforms mark a critical step in aligning France with EU fiscal standards.
Political Divisions Threaten Bayrou’s Reform Agenda
Despite EU backing, Prime Minister Bayrou must navigate a divided legislature to ensure the plan’s success. Without a parliamentary majority, President Emmanuel Macron’s party relies on alliances with either left-wing or far-right factions to pass reforms.
Recent concessions to opposition lawmakers have already softened the government’s initial €40 billion cost-cutting plan. Bayrou pledged to renegotiate President Macron’s unpopular pension reforms and reversed plans to cut 4,000 public education jobs. These compromises helped him survive a no-confidence vote last week but highlighted his administration’s vulnerability.
The collapse of Michel Barnier’s government in December serves as a stark warning. Barnier’s administration lasted just three months, brought down by disagreements over austerity measures. His finance minister, Antoine Armand, was replaced by Eric Lombard, a banker with a history at BNP Paribas and Generali.
Lombard made his first appearance as finance minister in Brussels this week, where he secured support for France’s reform package. After the meeting, he expressed gratitude to EU colleagues and emphasized that the budget reforms require collective effort. “These measures demand sacrifices,” Lombard said, “but they are essential for the future of our country.”
