French Prime Minister Sébastien Lecornu proposed a roughly €54 billion fiscal
consolidation plan to restrain budget spending growth through 2027 and prevent
further deficit widening. He warned that if next year’s finance bill fails to
curb persistent spending growth, the deficit could rise from 5.1% of GDP in 2025
to as much as 6.5%. France faces slowing growth, a split parliament and rising
resistance to spending cuts ahead of a presidential election in about seven
months, with the opposition unwilling to cooperate. A recent global bond
sell-off has pushed the French 10-year OAT spread over German Bunds to about 96
bps, near euro-area crisis highs. The government has cut this year’s growth
forecast to 0.5%, below the 0.9% assumed in the 2026 budget; Finance Minister
Roland Lescure said the original 5% of GDP deficit target “is no longer
feasible."
