France’s 2027 budget bill, which is set to face a divided parliament in the coming weeks, comes ahead of the April-May presidential election to succeed centrist President Emmanuel Macron.
The far right is viewing the vote as its strongest opportunity yet to take power.
France continues to grapple with mounting debt, while its budget deficit remains well above the eurozone’s 3% limit.
French government bond yields have climbed sharply in recent weeks, reaching levels not seen since the global financial crisis. Investors are demanding higher returns to hold French debt as the government struggles to bring deficit spending under control.
“I hear, here and there, the prophets of doom predicting the worst,” stated Finance Minister Roland Lescure in relation to the country’s ability to service its debt.
“Let me reiterate it here: France's signature is solid.”
According to an AFP report on the draft budget bill, the French government is targeting a reduction in the deficit to 5% of GDP through €43 billion in spending cuts and other measures.
France, the eurozone’s second-largest economy, was plunged into political turmoil in 2024 after Macron called a snap election that produced a hung parliament.
Since then, two prime ministers have been ousted after facing opposition over their proposed cost-cutting plans.
Prime Minister Sébastien Lecornu secured passage of the 2026 budget through the lower house only after agreeing to suspend Macron’s flagship pension reform.
He now faces the difficult task of steering a 2027 budget through parliament, as public frustration grows over the rising cost of living and the US-Iran war drives global fuel prices higher, France 24 reports.
Under the budget plan, VAT revenue is projected to rise by more than €7 billion from this year, while income tax receipts are expected to increase by €5.7 billion.
By contrast, corporate tax revenue is forecast to decline by €1.8 billion, according to the bill, in line with Macron’s pro-business approach.
Overall, net tax receipts in the state budget are set to increase by €18 billion year-on-year, reaching €375 billion.
The government also aims to “almost halve” the social security deficit in 2027, reducing it to between €12 billion and €13 billion, Labour Minister Jean-Pierre Farandou said.
The plan targets €5.1 billion in healthcare savings, including by cutting reimbursement levels.
Retirees, meanwhile, are expected to contribute €5.5 billion under the proposed measures.
The government plans to stop fully adjusting pensions above €1,260 a month in line with inflation, while also seeking to reduce tax allowances available to retirees.
The 2023 pension reform, which raised the retirement age from 62 to 64, triggered months of protests. Lecornu later abandoned the measure last year in an effort to secure backing from the Socialists, a pivotal parliamentary group, for the 2026 budget.
A ministry source told reporters that France’s public debt is expected to climb to 121.7% of GDP in 2027, more than twice the EU’s 60% debt benchmark for member states.
According to France’s statistics agency INSEE, a debt ratio at that level would be unprecedented since 1978.
France’s public deficit, which measures the gap between government revenue and spending, stood at 5.1% of GDP last year.
Rather than narrowing the shortfall as initially planned, the government now expects the deficit to widen to 5.4% of GDP this year.