France presents belt-tightening 2027 budget as bond investors sour on French debt
TLT•France is set to present a 2027 budget seeking €54 billion in savings, including wage and pension freezes, as bond investors question its ability to rein in the deficit. The government aims to cut the deficit from 5.4% of output this year to 5% in 2027.
1. Budget faces political hurdles
France is due to present its 2027 budget bill, which seeks to enact unpopular belt-tightening measures. The legislation faces a tough ride in a deeply divided parliament; the previous two prime ministers were toppled over their austerity plans.
2. Savings and deficit targets
The planned €54 billion in savings would include freezing public sector wages and all but the lowest pensions, along with targeted tax measures. Prime Minister Sebastien Lecornu says the squeeze is necessary to get the deficit back on track. His government aims to reduce it from 5.4% of economic output this year to 5% in 2027.
3. Debt and investor pressure
France's benchmark 10-year borrowing costs have surged to their highest level since 2008 as investors question the government's ability to rein in the deficit and fret over political uncertainty. The country's debt burden reached 119% of output in the second quarter, a post-World War Two record, and France will need to sell €340 billion in debt next year.
