(Bloomberg) — French Finance Minister Eric Lombard said he has secured support from Brussels for his deficit-reduction path, in a boost for the government as it tries to push through massive spending cuts to repair public finances. .
Most Read by Bloomberg
France scaled back fiscal consolidation ambitions after Michel Barnier’s government collapsed in December amid a parliamentary row over plans to sharply reduce the deficit to 5% this year from 6.1% in 2024.
The new administration led by Prime Minister Francois Bayrou is instead targeting a gap of 5.4%. However, it has maintained the goal of reaching below the 3% limit of the European Union for 2029.
As a first step, Lombard laid out 53 billion euros ($55 billion) in spending cuts and tax increases in the delayed budget bill for this year, which is still on its way to parliament.
EU support for France’s commitment to longer-term goals is a source of relief for Bayrou’s government as it struggles to find a way to curb the deficit that can either restore confidence in investors and find support in a hostile and divided National Assembly.
“The budget we presented is above all in the interest of our country,” Lombard told reporters after a meeting with his EU counterparts in Brussels on Tuesday. “We cannot leave such a level of debt and deficit for our children and grandchildren.”
The political upheaval of recent months and doubts about France’s finances have contributed to market sell-offs that have increased the country’s borrowing costs relative to peers.
The gap between French and German 10-year yields, a closely watched indicator of risk, has narrowed in recent days to around 77 basis points from above 88 basis points in December, providing some relief.
While Bayrou still faces opposition in parliament to the budget plans, his government has a greater chance of getting the finance bill adopted after negotiating the indirect support of some Socialists.
Until it becomes law, the administration is dependent on emergency legislation to continue operating with minimal spending.
More Reading from Bloomberg Businessweek
© 2025 Bloomberg LP