PARIS: French Prime Minister Francois Bayrou says he aims to reach an agreement with parliament on a 2025 budget that would reduce the country’s deficit to close to 5%, near the level his predecessor unsuccessfully tried to reach.
Bayrou said any budget agreement would need to be balanced and not only target companies, which he termed a “national treasure”.
The premier, who was appointed this month after the collapse of Michel Barnier’s government, added that his goal is to finalise the budget by mid-February.
“I think we need to find something around five, a little more than five, that will enable us to reach an agreement and strike a balance,” Bayrou said in an interview on BFM television.
He added that the budget effort shouldn’t unreasonably target companies even if they might need to make “short-term efforts”.
Bayrou’s comments came just hours after his cabinet was named with the principle task of crafting a budget that can repair the country’s finances and find support in a National Assembly that toppled Barnier, whose budget had a 5% deficit target.
France has been in political turmoil since June, when President Emmanuel Macron dissolved the National Assembly and called elections.
The ballot returned a lower house split among three feuding blocs: the leftist New Popular Front alliance, Marine Le Pen’s far-right party and centrists that largely support the president. The first two joined together to force out Barnier in early December.
While the deficit target may be similar, Bayrou said that the implications of his government’s budget, particularly regarding businesses, would be different.
“I’m for protecting companies,” Bayrou said. “I’m not saying that we can’t find some short-term efforts to make, but I think it’s necessary for everyone to know where the national treasure is. The national treasure is companies. They create wealth. They create jobs.”
Eric Lombard, who was tapped to become Finance Minister in the new government, also cited the importance of balance for any budget agreement.
“We must reduce the deficit without killing growth,” Lombard said at a handover ceremony at the Finance Ministry on Monday.
“It’s this balance we must look for and that’s the meaning of the 2025 budget.”
Still, finding support for the legislation will be difficult in the National Assembly, where Macron’s lawmakers are in the minority and opposition forces have shown little desire for compromise.
Because France doesn’t yet have a budget law for 2025, the state will be reliant from January on emergency legislation promulgated last Saturday and decrees that permit only vital spending and unchanged taxation.
France’s political and budget difficulties have sparked selloffs in the country’s debt in recent months, driving up the country’s borrowing costs compared to European peers.
To deliver on any new investment or spending pledges, Bayrou and Lombard must quickly navigate the fractured National Assembly.
That proved too much for Barnier when opposition parties balked at €60bil of tax increases and spending cuts he proposed in a stringent plan to rein in the runaway deficit.
Bayrou on Monday didn’t enter into specifics on the budget other than the overall target.
He will lay out his policy in a speech to the National Assembly on Jan 14 after a first meeting of the new cabinet Jan 3.
Since 2017, Lombard has been chief executive of the Caisse des Depots Group, a two-century-old financial institution that answers to parliament. — Bloomberg
