France presents belt-tightening 2027 budget as bond investors sour on French debt
TLT•France is presenting a 2027 budget with €54 billion in planned savings, aiming to cut the deficit from 5.4% of economic output this year to 5%. The plan faces a divided parliament as bond investors focus on France’s deficit and political uncertainty.
1. Budget faces opposition
The budget plan includes freezing public sector wages and all but the lowest pensions, along with targeted tax measures. Prime Minister Sebastien Lecornu has said the squeeze is needed to get the deficit back on track; the bill faces a tough passage in a deeply divided parliament.
2. Debt and bond pressure
France’s 10-year borrowing costs have surged to their highest level since 2008. The country’s debt reached 119% of output in the second quarter, a post-World War Two record, and France plans to sell €340 billion in debt next year.
3. Election-year tensions
The measures come ahead of the presidential election, scheduled for April 18-May 2. Public sector workers have struck over the wage freeze, while high school students have blockaded dozens of schools in protests over resources.
