France has a budget, at last. And a government widely predicted to collapse has a fragile new lease of life. Late last week, after six months of political turmoil in which one short-term government was unceremoniously dumped, deputies defeated no-confidence motions from hard left La France Insoumise (LFI) courtesy of abstentions by the latter’s allies, the Socialist Party and by the far-right Rassemblement National .
Prime minister Francois Bayrou’s centrist minority government was able to force predecessor Michel Barnier’s failed hairshirt budget through the National Assembly without a vote using a special constitutional mechanism, article 49.3. That had triggered the votes of confidence, which had only months before brought Barnier down, but which failed this time because both the Socialist Party and the far-right fear that blocking the deal would deepen the country’s crisis and that voters would punish them for this. The presidential election in 2027 is already looming large.
Bayrou made major last-minute concessions to the socialists on pensions and teaching job cuts, but the rift in the left-wing alliance is profound, with much talk of treachery. The Socialist Party insists, however, that it remains firmly opposed to the Bayrou government and is ready again to back votes of no-confidence in the pipeline.
The budget includes €30 billion in spending cuts and €20 billion in tax increases targeted mainly at business and the rich, but critics warn that it will only marginally reduce the budget deficit to 5.4 per cent of GDP this year. “A tiny step has been taken,” Le Monde warns, " the hardest part still lies ahead.”
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Yet although the cuts to many areas of public spending will hit the left’s political base, the tax increases sound like a socialist wish list. They include a surtax on corporate profits (expected to hit some 440 companies with sales over €1 billion and to generate €7.8 billion), a tax on share buybacks, an increase in the tax on financial transactions, and a surtax on high-earners to ensure they pay a minimum rate of 20 per cent. Passing the budget will come as a relief to President Macron, but he will know that further tests lie ahead for a shaky government.
