Unlock the digestive of free editor
Roula Khalaf, the FT editor, chooses her favorite stories in this weekly newsletter.
French Prime Minister François Bayrou survived a voting of disbelief at the National Assembly on Wednesday and postponed a late 2025 budget that aims to diminish the country’s deficits.
Voting was caused by Bayrou’s movement on Monday to use a constitutional clause to make the budget through parliament – an inevitable gambite as it has no majority and the French opposition parties have not refused to support government budgets.
His predecessor, conservative politician Michel Barnier, used the same constitutional method, but lost the censorship vote and crashed after three months when the left and right removed joined forces to remove it.
Bayrou succeeded by negotiating the budget concessions with the moderate leftist Socialist Party (SP), while Barnier focused his efforts on winning the silent support of the distant right, led by Marine Le Pen.
The prime minister admitted lawmakers that the budget was “imperfect” and “not the one we hoped for” but argued that it was urgent to spend it to ensure stability for the economy, families and investors.
Budget voting should provide at least a temporary relief from political turmoil in France after President Emmanuel Macron was ignited through four prime ministers since the beginning of 2024.
Gridlock has worsened since Macron called Snap elections last summer, just to lose them and face a broken national assembly in three block of similar sizes.
Financial markets have been provided this week from the perspective that the budget would finally be approved. The spread of France’s 10-year borrowing costs over Germany has fallen to 0.71 percentage points, still high from recent standards, but under the peak of 0.9 percentage points reached in November.
The Socialists-which were the essential voting of the swing on Wednesday instead of Le Pen’s National-Acquired rassemblet in the voting of distrust in the name of avoiding a complete political crisis. They first broke up with the rest of the left alliance and its largest ingredient, La France Left Insous (France Unprecedented), which accused them of treason.
The SP defended itself by saying it had forced the government to withdraw to lower 4,000 teachers and increase the cost of health care and medicines for consumers. In a potentially greater change, Bayrou also opened the door to “renegotiate” Macron’s non -monetary growth in the retirement age of 62 to 64. Trade unions and lawmakers will hold pension talks in the coming months.
Only 128 members of the National Assembly voted to overthrow Bayrou-ATA from the left LFI, the Communists and the Greens-many less than 289 needed for a majority.
The late 2025 budget is less ambitious in terms of termination of deficit than the previous government version, promising a fiscal package of € 50 billion in tax increase and cost reduction, from € 60bn.
An Independent Supervision Council estimated that 90 percent of fiscal efforts would come from tax increase, not cost reduction. About € 8 billion in income will come from the temporary stroke of larger corporates with a new tax, other fees for companies will collect a further € 4 billion, and the rich will pay additional tax on collected 2bn €.
Overall costs will still increase, despite a significant reduction in ministry budgets, mainly because it has been done little to address pensions and health care that make up about half of government spending.
France’s deficit has reached in recent years due to generous financial support for workers and companies during the Covid-19 pandemic and the later energy crisis. Macron’s pro-business policies also involved reduced taxes that aim to increase growth and employment.
The country’s degraded public finances became a major issue last year as the government constantly exceeds its deficit objectives to complete the year with a budget shortage of about 6 percent of GDP. France plans to collect about € 300BN from bond investors this year – a historically high level. As interest rates rise, its borrowing costs are projected to hit 54 billion euros this year, just like the defense budget.
Bayrou’s government has pledged to reduce France’s deficit to 5.4 percent of national production by the end of this year; Barnier intended to reach 5 percent of GDP.
France remains much more than 3 percent of the EU -established GDP deficit ceiling, and is one of the worst performers in the region. Brussels has placed it in a list of surveillance places with excess deficits and will monitor closely to see if France gives.
Additional reporting by Ian Smith to London
