French Prime Minister Sébastien Lecornu announced on Thursday that the government will implement €54 billion ($62 billion) in public spending cuts during 2027 to reduce the national deficit. Speaking to the Le Figaro business newspaper, Lecornu emphasized that the measures do not represent austerity, even as high fuel prices reignite social tensions just months before the presidential election.
The cuts are projected to lower the public deficit to 4.8 percent of GDP excluding defense spending, and 5 percent including military expenditures. While the government had initially targeted a reduction from 5.1 percent of GDP recorded last year, it conceded on Thursday that the deficit will likely rise to 5.4 percent instead. This figure remains significantly above the European Union’s 3 percent limit and is among the highest in the eurozone.
Lecornu acknowledged the political risks associated with the plan but insisted, “We are a long way from austerity.” The proposal targets a country he described as relying too heavily on public spending. The economic rationale is urgent: France’s economy contracted in the first quarter of 2026 and stagnated in the second, raising concerns about the sustainability of its debt, which stands at 117.5 percent of GDP.
Financial markets have reacted sharply to these worries, with government bond yields soaring to levels not seen since the 2008 global financial crisis. This increase in borrowing costs is particularly acute given that France’s debt-to-GDP ratio is at its highest level since World War II.
The government is also cautious about triggering a new wave of protests similar to the yellow vest movement, which was sparked by fuel tax hikes. With global oil prices exceeding $100 per barrel driving record petrol and diesel costs in France, the administration is navigating a volatile social landscape seven months before the presidential vote.
Under the new budget framework, Lecornu stated that pensioners would face only limited contributions to the cost-cutting effort, affirming that “no pension will be reduced.” He noted that the pace of future pension increases will be debated in parliament. Additionally, the government ruled out freezing most social benefits, though public sector workers will not receive cost-of-living adjustments. To generate revenue, income tax thresholds will be allowed to rise, while some companies will be exempt from an additional levy on larger businesses.
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