Barnier promises unprecedented €60 billion budget measure for 2025

France will take unprecedented action to lower its public deficit for 2025, with the new Barnier government's advisors announcing plans on Wednesday (2 October) to save €40 billion and potentially earn an additional €20 billion in revenues.

Prime Minister Michel Barner presented his government's plans in a general policy speech before French MPs on Tuesday, and a day later, officials outlined the new €60 billion budget measure.

Barnier said the aim was to "bring the deficit down to 5% of GDP in 2025" from around 6% in 2024 and then "return below the 3% cap in 2029, in line with European commitments," referring to the 'excessive deficit procedure' the European Commission had threatened to trigger on the country's finances in Jully.

The new measures also foresee an estimated €20 billion in additional tax revenues and an unprecedented €40 billion in spending cuts for 2025. They were preceded by Barnier's repeated recent warnings about the state of French finances.

To reach new targets, ministries will have to follow recommendations they received in August from the previous Attal government, which anticipated €15 billion in cuts and an additional €5 billion in savings.  

Savings will also come from a €15 billion reduction in social security spending, mostly as a result of the postponement of the indexation of old-age pensions from 1 January to 1 July 2025. Local authorities will also be asked to contribute around €5 billion. 

These savings are expected to be supplemented by an additional €20 billion in revenue, which would mainly result from a windfall tax on the profits of companies with a turnover of more than €1 billion, which Le Monde says could raise around €8 billion. 

0.3% of households will also be affected by an exceptional contribution aimed at the wealthiest French citizens, Budget Minister Laurent Saint-Martin said on France 2 on Thursday 3 October. However, this may cause discontent with Ensemble, the party of French President Emmanuel Macron, a governing coalition member. 

"Any tax increase would contribute to deteriorating the country's regained competitiveness, breaking the trust pact established with the French people, driving companies away, and condemning any sharing of value," argued 27 Ensemble MPs in an op-ed published in La Tribune on Sunday (29 September). 

Their arguments were echoed by former prime minister Gabriel Attal, who told MPs in the National Assembly that the "right approach" to reducing the deficit was "less spending and certainly not more taxes." 

Such comments did not sit well with Barnier, who said he had been "very attentive" to Attal's "additional savings proposals". Still, they noted that he had only found out about them after taking up the post of prime minister. 

The finalised budget proposal is expected to be presented to MPs on 10 October - although a no-confidence motion against the new government, which already has the support of 193 left-wing MPs and is expected to be tabled next week, could ultimately thwart the process. 

[Edited by Daniel Eck/Anna Brunetti]