French PM pledges €54 billion in spending cuts to tackle deficit

French Prime Minister Sébastien Lecornu confirmed in an interview with Le Figaro published Thursday that the government plans to cut public spending by €54 billion (about $62 billion) in 2027. The goal is to bring the budget deficit down to 4.8% of GDP excluding defence spending, or 5% including it.

The government had initially hoped to reduce the deficit from last year's 5.1% of GDP — one of the highest in the eurozone and above the EU's three-percent limit. However, officials acknowledged Thursday that the deficit will likely rise to 5.4% instead.

Lecornu maintained the plan does not constitute austerity, despite acknowledging the political risk involved. Retirees will be asked to make only a limited contribution to the savings effort — no pension will be cut, though parliament will decide on the pace of future pension increases, which are normally tied to inflation. Many benefits will not be frozen, but public sector workers will not receive cost-of-living adjustments. Income tax thresholds will be allowed to rise, generating additional revenue from individuals, while taxes on some larger companies will fall as they are excluded from an additional levy targeting big businesses.

The announcement comes as a surge in global oil prices above $100 per barrel has pushed petrol and diesel costs in France to record highs, fueling calls for protests over the cost of living. With the presidential election seven months away, the government is wary of triggering a new wave of unrest reminiscent of the yellow vest movement.

France's economy contracted in the first quarter of the year and stagnated in the second, deepening concerns over the sustainability of public debt. Government bond yields have climbed to levels unseen since the 2008 financial crisis, while public debt stands at 117.5% of GDP — the highest level since World War II.