Bankinter | Prime Minister Bayrou proposes a €43.8 billion adjustment to the 2026 budget. The aim is to reduce the deficit, which stands at -5.8% in 2024 (as opposed to -3.1% in the EMU, -2.8% in Germany, -3.4% in Italy and -3.2% in Spain) to -4.6% in 2026, with a commitment to reach -3% in 2029.
The government’s projections point to a figure of -5.4% in 2025. The measures presented in the draft include the layoff of 4,000/4,500 civil servants, a cut of €5 billion in healthcare spending, the freezing of some public salaries and social benefits, including pensions, the sale of state holdings in companies and, finally, the creation of a new tax on high incomes. He also pointed to the possibility of abolishing two national holidays, which would generate €4.2 billion.
Bankinter analysis team’s view: Drastic measures proposed by the French Prime Minister, which will have to be negotiated in the coming months with a view to possible approval by the French Parliament in the autumn. Bardella, leader of the National Rally party, has already raised the possibility of joining forces with other opposition parties to table a motion of no confidence after the summer if the negotiations fail. This already happened with the previous Prime Minister Barnier, which resulted in his resignation at the end of 2024, thereby increasing political risk in France given the possibility that the same scenario could happen again or that early parliamentary elections could even be called.
