France is aiming for a fiscal adjustment of roughly €60 billion ($66.4 billion) through a combination of spending cuts and tax increases. This initiative, led by Prime Minister Michel Barnier, seeks to reduce the country’s expanding budget deficit and boost investor confidence.
According to government officials, who spoke under anonymity, this adjustment is necessary to lower the fiscal deficit from approximately 6.1% of GDP this year to 5%. The majority of the reductions, a little over two-thirds, will come from cuts in departmental, local government, and social security system expenditures.
Additionally, a temporary extra tax on wealthy individuals and large corporations, alongside increased green taxes, is expected to generate nearly €20 billion in revenue. Following the announcement of the budget plan details, the risk premium investors demand for holding French government bonds over safer German bunds narrowed by 1 basis point to 78 basis points but remains near its highest level in over a decade.
