French Government Faces Budget Pressure Amid Standoff Over Pension Reform Suspension

The French government is navigating a tense political landscape as it faces urgent budgetary challenges without a new government formation timetable, while opposition to suspending the 2023 pension reform intensifies.

Prime Minister Sébastien Lecornu’s second government is under threat of a censure motion potentially as early as this week, following his general policy statement, according to Hervé Marseille, president of the Union of Democrats and Independents (UDI). Marseille stressed that the government’s stability is precarious even before its official formation, largely due to demands from the Socialist Party (PS) for a suspension of pension reforms enacted in 2023. Marseille described this suspension as a “red line” and opposed reopening pension reform, warning that the PS’s strong influence risks complicating budget approval processes and could lead to hostile parliamentary outcomes.

Against this backdrop, Philippe Juvin, the budget rapporteur at the National Assembly from Les Républicains, indicated a willingness to consider reducing the contribution sociale généralisée (CSG) in the upcoming budget bill to increase net salaries. Juvin, however, cautioned on how loss of revenue from a CSG cut would be offset and emphasized that government flexibility lies mainly in cutting expenditures rather than raising taxes. He criticized the proposed €6 billion state spending cuts as insufficient, suggesting further savings could come from sectors like education, where declining birth rates could justify eliminating 50,000 posts by 2032.

Juvin underscored the importance of meeting the deficit reduction target below 3% of GDP by 2029 to maintain market and European partner confidence. He also firmly opposed abandoning pension reform, highlighting that such a move would undermine France's credibility. Finally, Juvin warned against dismissing the constitutional article 49.3, historically essential for passing budgets swiftly amid parliamentary deadlocks.

The government faces a delicate balancing act: negotiating with the Socialist Party to avoid a censure vote while resisting revisiting contentious pension reforms amid budget pressures and political instability. Both Juvin and Marseille’s comments illustrate the high stakes associated with the upcoming budget discussions and political maneuvering in the National Assembly.