French Government Proposes €54 Billion Savings Plan to Stabilize 2027 Budget

French Prime Minister Sébastien Lecornu has unveiled a comprehensive plan to achieve €54 billion in budget savings for the 2027 state budget, aiming to stabilize public finances amid rising expenditures and debt pressures.

Addressing the financial challenges ahead, Lecornu highlighted that without these savings, France's budget deficit could soar to 6.5% of GDP. The increase in public debt servicing costs due to higher interest rates stemming from geopolitical tensions is expected to add €10 billion in expenses next year. Social security spending is also projected to climb by €22 billion, driven by demographic factors such as an aging population. Additionally, local administrations face rising costs, with planned expenditure increases of €7 billion requiring strict control to align with overall savings goals.

Key measures proposed to achieve the €54 billion target include a freeze on the civil servants' pay index point, expected to save around €2 billion. The government plans to maintain a strict freeze on most ministerial budgets, exempting only defense, and implement reforms to reduce sick leave costs and improve the management of training funds. Importantly, the government will not raise income taxes but aims to lower the surtax on large companies from €8 billion to €5 billion to ease the tax burden on business.

The plan includes social measures such as a potential freeze on housing assistance (APL), a proposed waiting period for certain social benefits to foreigners, and efforts to ensure no pensions decrease—though the largest pensions might be frozen. Lecornu emphasized that overall, the pensioners’ effort would be less than €6 billion, signaling a moderate approach to benefit adjustments.

Lecornu portrayed this strategy not as austerity but as an "offensive copy," striving for fiscal responsibility while avoiding drastic social impacts. He also stressed the political significance of these economic measures as France approaches its presidential election, underscoring their central role in national discourse.

This financial roadmap reflects the government's commitment to fiscal stability by balancing expenditure cuts with economic growth objectives, while managing demographic and geopolitical challenges impacting France's public finances.