Legislation Proposal: Halting Allocation of Funds, Budgetary Standstill
Government Initiatives Shape New Budgetary Forecasts and Legislation
In an effort to regain control over France's budgeting, a new organic law proposal aims to provide more flexibility for the government to adjust when fiscal deficits spiral. This initiative, put forth by Mathieu Lefèvre, a Renaissance deputy in Val-de-Marne, was submitted to the National Assembly's President last Thursday, May 22.
According to Lefévre, who co-chaired the recent Commission of Inquiry into the 2023 and 2024 budgetary overrun, this text could enhance forecasting accuracy and enable correction if needed. He emphasized, "Given the urgency to rectify our accounts, this text could be instrumental in improving our forecasts and steering us back on course if we deviate."
Recent developments have seen a growing focus on reducing the nation's public deficit and managing public debt. While there have been minimal changes in the broader budget discussion, François Bayrou, the Prime Minister, has yet to reveal detailed plans beyond hinting at a possible VAT increase or reevaluating the 10% retirement income tax cut.
Beneath this apparent stasis, however, tensions are mounting on the political right, with the prime minister aiming to display the benefits of his mission to streamline government spending. Despite early setbacks, where ministries justified each million spent without signs of reform, ministers are now expected to present their proposals by mid-June.
Additional budgetary developments include the 2025 budget focusing on reducing the public deficit to 5.4% of GDP, slightly rising to 5.6% and 5.7% in 2025 and 2026, respectively. Furthermore, the budget includes a 2 billion euro increase for the Energy Transition to support decarbonization and climate change mitigation efforts.
In a separate development, the government has proposed a referendum on the 2026 budget, aimed at securing public support for significant spending cuts and deficit reduction plans. This initiative seeks a €40 billion reduction in the budget, primarily through expenditure cuts, rather than new taxes, to comply with European fiscal rules.
As France navigates these fiscal challenges, the economy is expected to grow by 1.3% in 2026, driven by investment recovery and higher real wages. Overall, the nation remains committed to enacting reforms that balance fiscal discipline, strategic investments, and public support.
The proposed organic law by Mathieu Lefèvre, a Renaissance deputy, could potentially revise the government's financial flexibility for adjusting fiscal deficits, thereby enhancing budgetary forecasting accuracy (finance, business, politics, general-news). In addition, the government is advocating for a referendum on the 2026 budget, seeking public support for significant spending cuts to adhere to European fiscal rules (politics, finance, general-news).
