France presents belt-tightening 2027 budget as bond investors sour on French debt
EWG•France is due to present a 2027 budget bill with €54 billion in planned savings, including frozen public-sector wages and most pensions. The government aims to cut the deficit from 5.4% of output this year to 5% in 2027, while France’s 10-year borrowing costs have reached their highest level since 2008.
1. Budget faces parliamentary hurdles
France is due to present its 2027 budget bill, proposing spending restraint and targeted tax measures as the government seeks to reduce the deficit. The legislation faces a tough path in a deeply divided parliament after two previous prime ministers were toppled over austerity plans.
2. Investors focus on debt
Prime Minister Sebastien Lecornu says the planned €54 billion in savings is necessary to get the deficit back on track. France’s benchmark 10-year borrowing costs have risen to their highest level since 2008 as bond investors question the government’s ability to rein in the deficit and weigh political uncertainty ahead of next year’s presidential election.
3. Record debt issuance planned
France’s debt reached 119% of output in the second quarter, a post-World War Two record, the INSEE statistics office said. The country plans to sell €340 billion in debt next year to fund its shortfall and refinance bonds issued at very low rates during the COVID-19 pandemic.
