France’s government is set to present its 2025 budget on Thursday, aiming for €60 billion ($65.68 billion) in tax hikes and spending cuts to address a growing fiscal deficit.
Prime Minister Michel Barnier faces pressure from financial markets and EU partners to act after falling tax revenues and increased spending. The budget, representing a 2% national output squeeze, needs careful negotiation to pass through parliament, where Barnier lacks a majority.
The budget includes a temporary surtax on big companies and individuals earning over €500,000, while middle-class taxpayers will see restored levies on electricity, which were reduced during the energy price crisis. The government aims to reduce the public deficit from 6.1% of GDP this year to 5% next year, with a longer-term goal of reaching the EU’s 3% limit by 2029.
Barnier’s government faces opposition from both the far-right National Rally and members of President Emmanuel Macron’s party, complicating the budget’s passage. Additionally, €20 billion in cuts across ministries and reductions to welfare, health, pension, and local government budgets are planned. The European Commission, which has flagged France for breaching fiscal rules, will scrutinise the budget closely. Financial markets are also expected to monitor the process to gauge the government’s stability.
Melissa Enoch
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