Experts Sound Alarm on France's Economic Future Amid 2026 Budget Discussions

As France prepares for its 2026 budget, prominent voices within the economic sector are raising concerns about the country's fiscal trajectory and the implications for growth and investment. Pierre Moscovici, a key figure in French economics, has expressed support for the budgetary plan proposed by François Bayrou, which aims to achieve €43.8 billion in savings. Moscovici insists that France’s current deficit—standing at 5.8% of GDP, the highest in the Eurozone—must be tackled urgently to prevent a projected debt of €3,500 billion by the end of the year. He emphasizes that reducing the deficit below 3% by 2029 is crucial for stabilizing the nation’s finances and argues for shared sacrifices across different sectors, including state and social security systems.

In a recent interview, Moscovici stated, "It is time to get on a budgetary path that brings us below 3% of deficit by 2029," highlighting the necessity for collective efforts to bear the burden of debt reduction without disproportionately affecting low-income groups. He supports the idea of a 'blank year' financially, warning that hard choices for long-term economic reforms will be needed in the coming years. Specifically, he pointed out that significant pressure exists for the government to negotiate compromises to prevent censure from various political factions, suggesting that broad support for the budget plan is critical for its realization.

Conversely, Patrick Martin, the head of Medef, has raised alarms regarding the deteriorating state of the French economy, particularly emphasizing the decline in business investments—a trend he describes as alarming over the past two and a half years. Criticizing the government's public spending, he noted a notable 6.7% increase in state personnel costs and stressed that the approach to public finances must change to stimulate economic growth. Martin argued that while high earners in France pay substantial taxes, there is a significant need for structural reforms to lower production taxes and foster increased business investment.

Martin also voiced concerns about the housing crisis, contending that the drop in housing production is affecting economic stability and job opportunities. He warned that the current situation could lead to broader social unrest as affordability continues to plummet.

Together, these discussions paint a complex picture of France's economic landscape as it navigates significant challenges related to budgetary reforms and the urgent need for strategic, inclusive policy measures. With the 2026 budget looming, both Moscovici and Martin suggest that addressing these economic hurdles with effective reforms will be essential to avert further decline and promote growth.