Presenting the key features of the government’s planned draft legislation for the 2026 budget on Tuesday, French Prime Minister François Bayrou adopted a grim, alarmist style, warning of the country being in “mortal danger” at this “critical moment”, his measures representing a “last stop before the cliff” and the “crushing of France by debt”.
Speaking behind a stand with a banner that read “The moment of truth”, he detailed planned savings of 44 billion euros from current spending in order to bring the 2025 budget deficit of 5.4% of Gross Domestic Product (GDP) down to 4.6% in 2026.
He underlined that this effort would have to be repeated over the following years to honour France’s pledge to the European Union (EU) that its deficit would stand at below 3% of GDP by 2029. The fearsome cutbacks this will entail will no doubt have a deleterious effect on economic growth, which already, according to Bank of France estimates, will stand at 0.6% for 2025.
While Bayrou’s slogans slipped in during his speech, “stop the debt” and “onwards with production”, may appear comical, behind these are measures that are singularly violent at a social level.
The future of Bayrou’s government is tied to that of his budget, which must be approved by France’s hung parliament, where no one party has had an absolute majority since President Emmanuel Macron called snap elections in June last year. There has been harsh criticism of the measures he announced on Tuesday from both the Left and Right, and in the case that the draft budget legislation is rejected by Members of Parliament from both the leftwing NFP alliance and the far-right Rassemblement National party, Bayrou and his government would likely be brought down by a no confidence vote.
Enlargement : Illustration 1
The prime minister’s call for the scrapping of two public holidays will no doubt be the main talking point over the coming days. He has proposed that these should be Easter Monday, which he said had “no religious significance”, and the May 8th holiday to commemorate the capitulation of Nazi Germany in 1945. Justifying the latter choice, he said it was because the month of May, with its relatively high number of public holidays, “has become a true gruyere” for French economic production, referring to the French version, which is full of holes, of the Swiss cheese.
According to his optimistic calculations, axing both those public holidays would bring in an extra 4.2 billion euros for the public purse.
A clueless budget
For the rest, Bayrou presented a budget bereft of ideas, which appeared as a copy-paste of the different budgets for public spending in 2025, only without taking inflation into account nor the increasing needs of the population regarding public services. It would be difficult to devise a more accountant-like vision of the economy.
Bayrou announced that 2026 would be a “white year”. In the detail, he eyes saving 7.1 billion euros from the de-indexation of inflation from welfare benefits and pensions, from the pay of civil servants, from the scales of income tax, and also from the contribution sociale généralisée (generalised social contribution), a tax on income and wealth to fund the benefits system.
This “white year” would above all penalize the most financially modest households, according to a report in June by economist Pierre Madec from the French Economic Observatory (OFCE), publicly funded research centre. “The 5% of households that are the most modest would thus lose close to 1% of disposable income compared with the usual revalorisation [to compensate for inflation],” he wrote. “For households situated in the centre of the field, the impact would be around 0.5%, and less than 0.3% for the wealthiest households.”
Still on the subject of the social consequences of the spending, Bayrou envisages proposing a new reform of the unemployment benefits system before parliament in September, which he argues would allow savings of 1.8 billion euros.
In the same logic as the scrapping of compensation for inflation, as detailed above, the prime minister hopes to save close to 10 billion euros from the freezing of the various budgets (within the budget) of the state and its operators. The rule, said Bayrou, was “not to spend one euro more in 2026 than in 2025”.
Beyond the freezing of state spending, he hopes to save a further several hundred million euros through reducing around 3,000 jobs in the public service sector next year, and axing another 1,000 to 1,500 in “certain agencies” of the state.
The only state budget he sought to increase is that of defence, as already announced by President Emmanuel Macron on July 13th to finance his new strategy of prioritising France’s military strength. This entails an increase of 3.6 billion euros to the already agreed increase announced in military programming legislation, which would amount to a total hike in military spending of 6.7 billion euros in 2026 compared to that in 2025.
Cutting healthcare costs
On the healthcare front, the body that sets estimations on public health spending, ONDAM, which comprises the increasing needs of the population, will see more than half of its purse emptied in order to make savings of 5.5 billion euros in 2026. This entails an increase in the patients’ share of the cost of medicines and healthcare.
Furthermore, Bayrou wants to reduce public spending regarding the care of patients with long-term ailments, by halting “integral refunding of medicines that have no link with, or which have weak medical effects upon, the declared ailment”, and also by removing the status of long-term ailment as applied to those patients “whose state of health no longer justifies it”.
Hospitals will be required to improve controls of “their purchases”, while he called for “medical and medicalised” items and equipment – including things like wheelchairs and crutches – to be re-used “after verification”, and including their retrieval after the death of a patient.
Paid sick leave is also targeted. He said that “after consultations” with workforce unions and management bodies, “a structural reform” would be introduced to prevent “abusive” use of sick leave.
Meanwhile, local authorities are expected to make savings of 5.3 billion euros, partly through a freeze on spending. “Their spending must not progress faster than the resources of the nation,” declared the prime minister. While the state funds handed to local authorities will be capped, he said “special attention” would be given to those départements (France's 101 administrative territories equivalent to counties) which encounter the most financial difficulty, “with an exceptional” support package totalling 300 million euros.
A poor increase in taxes for the wealthiest
Concerning what he called “social and fiscal justice”, Bayrou said 2.3 billion euros would be retrieved in 2026 through a crackdown on tax fraud and fraudulent claims to public benefits allowances, with draft legislation to be presented to parliament in the autumn “against social and fiscal fraud, to better detect [and] better punish [the trickery], and to recover the lost money”.
A small extra contribution to the budget from the wealthiest households is envisaged through a possible extension into 2026 of a supplementary tax on high earners introduced this year, and which was estimated to bring an annual extra 2 billion euros to the public purse. However, the finance ministry has been unable to confirm the precise figure.
Bayrou also spoke timidly of introducing “supplementary measures to fight against the abusive optimisation of unproductive patrimony”. But given the little enthusiasm shown until now by the executive for tackling the aggressive tax optimisation by France’s wealthy elite, it is difficult to imagine that such “measures” would bring in more than a few hundred million euros, even a few dozen million.
- The original French version of this article can be found here.
English version by Graham Tearse