Fiscal Council warns: French budget cuts could prove ineffective

The French government is preparing its draft budget for 2026, which is based on optimistic assumptions about economic development. However, according to estimates by the independent French Fiscal Council, the planned austerity measures may not achieve the desired effect – or may not be implemented at all.

Prime Minister Sébastien Lecornu, who was reappointed to his post last Friday, is working to submit the draft budget to parliament before the constitutional deadline for its deliberation expires. The draft has already been reviewed by the Haut Conseil des Finances Publiques, which announced that the goal is to reduce the deficit to between 4.7 and 5.0 percent of GDP.

The government's plan envisages spending cuts of more than €30 billion. It includes restricting tax breaks for companies, tightening the rules on social security contributions, and introducing new taxes, including a tax on small parcels and a special contribution for supplementary health insurance.

The measures also include an adjustment to the taxation of holding companies, which are used to reduce tax liability. However, the draft does not include a two percent wealth tax on assets over €100 million, as demanded by the Socialists.

(reuters, sie)