Macron’s final budget hinges on Le Pen’s backing … for now
PARIS — The French government on Thursday proposed a 2027 budget with €43 billion in savings that seem designed to appease Marine Le Pen’s far-right party, the National Rally, and reassure markets frightened over France’s increasingly dire fiscal outlook.
“In 2027, we will return to the path of consolidation,” Economy and Finance Minister Roland Lescure told reporters Thursday as he presented the budget that lawmakers will debate in the coming weeks.
The government is betting that €9 billion in state spending cuts, a freeze on adjusting pensions for inflation and the extension of a temporary tax on big companies — which is expected to bring in €5 billion — will be enough to reduce the budget deficit from an estimated 5.4% of gross domestic product this year to 5% in 2027. Prime Minister Sébastien Lecornu said last month that the government was seeking to squeeze the budget by €54 billion, but Lescure said measures already adopted this year would save the government €11 billion in 2027.
The government also committed to upping its annual contribution to the European Union budget by €2.5 billion as required by the bloc’s rules.
But Paris’ proposal to delay access to welfare outlays and make key provisions easily modifiable by the next government were seen by lawmakers across the political spectrum as an olive branch to Le Pen, the front-runner in the spring race to replace term-limited President Emmanuel Macron.
Since snap elections delivered a hung parliament in 2024, the budget process has become treacherous territory. Lecornu’s two predecessors lost their jobs trying to pass their spending plans in parliament by year-end.
Lawmakers of all political colors told POLITICO that the National Rally could play ball on the budget, allowing Le Pen to look like a responsible player who avoided a financial crisis while being able to still change the text if she wins.
“The only party that can afford not to topple the government is the National Rally,” said a lawmaker and former minister from Macron’s camp who was granted anonymity to speak candidly.
France Unbowed MP Eric Coquerel, the president of the National Assembly finance committee, told POLITICO he has “the impression that for now the prime minister is banking on the National Rally not to topple him.”
Le Pen pledged at POLITICO’s Playbook Paris Live event last week to amend the budget rather than just block it. But centrist veteran Charles de Courson cautioned that while the National Rally is “showing some openness” now, the party could very well topple Lecornu later — as Le Pen did with former Prime Minister Michel Barnier.
There is plenty of time for Lecornu to change his strategy, but a protracted and contentious budget debate would further fuel concerns of a sovereign debt crisis given the number of economic indicators pointing in a worrying direction.
Borrowing costs are now their highest since 2008, and the premium investors demand to hold French 10-year bonds over their German equivalent crossed 130 basis points Thursday — a level not seen since the 2012 eurozone debt crisis.
Statistics agency INSEE reported Wednesday that inflation hit 3% in September as energy prices spiked. The day before, INSEE said French debt reached a record-high of 119% of GDP at the end of June.
However, Lescure on Thursday dismissed warnings of an impending financial crisis as the work of “prophets of bad luck.”
“France’s signature is solid,” he said.
