The new French government is facing its first major test in a hostile parliament as it tries to push through a budget of spending cuts and tax increases on the wealthy and big companies aimed at saving €60bn (£50bn) and reining in a ballooning fiscal deficit.
The rightwing prime minister, Michel Barnier – who was appointed last month by Emmanuel Macron in an attempt to end the political paralysis following an inconclusive snap election – said France was facing a debt crisis and had to act.
The finance minister, Antoine Armand, told journalists the aim was to “reduce our deficit and contain our debt” which was needed “to protect France’s financial credibility and more broadly ensure our economic stability”.
The new government is under increasing pressure from financial markets and European Union partners after tax revenues fell far short of expectations this year and spending exceeded them.
But the budget squeeze, drawn up at record speed and without a parliamentary majority, has to be carefully calibrated to placate opposition parties, who could not only veto the budget bill but also band together and topple the government with a no-confidence motion.
Barnier may have little choice but to accept numerous concessions to get the budget bill passed, which is unlikely before mid- to late-December.
Marine Le Pen’s far-right National Rally, whose tacit support Barnier needs to survive any no-confidence motion, has already attacked a government proposal to postpone a pension increase by six months to save €4bn.
Jean-Philippe Tanguy of Le Pen’s party said on Friday that the draft budget was a “house of horrors by finance ministry technocrats” and was riddled with “tax injustices”.
An alliance of leftwing parties, which received the largest number of votes in the July election and said they should have taken the prime minister role, were highly critical.
“This is the most violent austerity plan that this country has ever seen,” said Manuel Bompard, a lawmaker for the leftwing La France Insoumise. “It will cause French people to suffer.”
In a finance committee hearing, the Green MP Eva Sas said the spending cuts were “brutal and excessive”. The Socialist MP Philippe Brun said his party agreed with taxing the richest but disagreed with targeting education by cutting 4,000 teachers.
After years of Macron’s pro-business policies and tax cuts, members of his centrist party said they could reject certain tax increases if they thought they would threaten jobs and reindustrialisation.
Barnier’s government denied a policy of austerity, saying they were being measured in their approach.
The government has said the budget would reduce the public deficit to 5% of gross domestic product next year from 6.1% this year – higher than almost all other European countries. This is described as a first step towards bringing the shortfall into line with an EU limit of 3% in 2029.
But the national fiscal watchdog, mandated by law to make sure the budget bill stacks up, said the 2025 deficit target looked “fragile” and was based on optimistic economic assumptions.
Tax increases will make up one-third of the €60bn budget squeeze, with the rest coming from spending cuts across ministries. Spending on welfare, health, pensions and local governments will take targeted hits, which opposition lawmakers may be tempted to reverse in parliament.
All taxpayers will be hit by plans to restore a levy on electricity consumption.
If the opposition parties come out against the budget draft law, the government has the option of forcing it through without a vote under article 49.3 of the French constitution. But this would open the door to another vote of no confidence, putting Barnier at the mercy of the opposition again.