France Considers 'Blank Year' Budget to Address Public Finance Crisis
France's government is considering a 'blank year' budget strategy for 2026 to address its public finance crisis.
Key Points
- • France's public debt reaches 114% of GDP, a new record.
- • The government proposes a 'blank year' budget to save €40 billion.
- • This budget would freeze all state and social security spending for 2026.
- • Political feasibility is questionable due to lack of majority in the National Assembly.
As France grapples with a public finance crisis, the government is exploring a radical budgetary strategy, referred to as the 'blank year' budget for 2026. This proposal aims to save €40 billion through significant spending cuts, as public debt levels have reached a staggering 114% of the nation's GDP. Key ministers, including Amélie de Montchalin and Éric Lombard, have acknowledged the urgency of the situation, highlighting that the proposed budget would freeze all state and local government spending, as well as social security expenditures, effectively rolling over the 2025 budget into the next year without accounting for inflation.
The 'blank year' budget's potential savings are substantial, estimated at around €30 billion for the state. However, the plan faces considerable political hurdles, particularly due to the government's lack of an absolute majority in the National Assembly. Historical context shows that previous implementations of a 'blank year', such as those under former Prime Minister Édouard Philippe in 2019, resulted in minimal increases to social benefits despite rising inflation.
Currently, inflation is projected at a modest 1.3% for the coming year, adding complexity to the budgetary landscape. The government's proposal to not adjust income tax brackets for inflation could also lead to increased financial burdens on taxpayers. The feasibility and acceptance of the 'blank year' approach remain uncertain as the government navigates the political landscape surrounding public spending and fiscal responsibility during this critical juncture.