- Prime Minister Sébastien Lecornu has unveiled a “reversible” 2027 budget with no tax increases.
- The public deficit target is set at a maximum of 5.1% of GDP, against a backdrop of zero growth in the second quarter.
- The government is considering de-indexing the highest retirement pensions to contain public spending.
An adaptable budgetary framework ahead of the presidential election
With less than eight months to go before the presidential election, head of government Sébastien Lecornu has outlined the draft finance bill for 2027. This budget, described as “reversible”, is designed not to lock in the choices of the future majority while maintaining a trajectory of fiscal discipline. The Prime Minister reaffirmed his refusal to allow any increase in the tax burden for the coming year, arguing that it is not up to the current team to alter major tax levers. The executive is meeting for a seminar this Monday to finalise these decisions ahead of the official presentation scheduled for 30 September. The strategy relies on tight financial management, at a time when growth was flat in the second quarter and the debt burden is rising due to interest rates.
Targeted savings and sovereign ministries protected
To achieve its objectives, the state plans to curb the growth of public spending, which is expected to rise more slowly than inflation. While the budgets for Defence, Justice, the Interior and National Education are ring-fenced or increasing, other sectors such as Labour, Health and Agriculture will be asked to contribute. In particular, the government is studying a differentiated upgrading of pensions, with a possible under-indexing of the highest pensions relative to price rises. Furthermore, the exceptional contribution on the profits of large companies could be maintained for a third year, although its level is being debated. Other avenues for savings are being discussed, including the ending of reimbursements for medicines with low medical benefit and a reform aimed at limiting the abuse of sick leave.
