France is striving to restore business confidence by passing a 2027 budget that avoids additional public spending, Finance Minister Roland Lescure said, amid rising borrowing costs and widespread social unrest. Speaking ahead of next year’s budget vote, Lescure emphasized the need to demonstrate fiscal discipline to bond markets while addressing ongoing protests across the country.
French government borrowing costs recently surged to levels not seen in 25 years, reflecting investor concerns about the country’s high public spending and fiscal management. This anxiety has been compounded by the upcoming presidential election in April, where far-right candidate Marine Le Pen leads in some polls, raising fears of political instability and challenges to fiscal consolidation.
Despite these pressures, rating agency Moody’s refrained from downgrading France’s credit rating last week, signaling a tentative vote of confidence in the government’s economic outlook. Lescure acknowledged the difficulties ahead but highlighted France’s underlying economic strengths.
Protests have erupted nationwide over issues ranging from education conditions to the rising cost of living, placing additional strain on President Emmanuel Macron’s administration. High school students’ demonstrations have broadened to encompass wider social grievances, with unions and activists demanding further government interventions.
The government is seeking to avoid repeating the extensive financial commitments made during the 2019 Gilets Jaunes crisis, when it introduced €17 billion in tax cuts and support. Lescure indicated that similar spending increases are not affordable given current deficit and market pressures, stating, “We don’t have the money, so we have to be creative.”
Recent initiatives include efforts to reduce fuel costs through increased imports of diesel from Middle Eastern suppliers and strategic reserve releases. Education sector measures announced by Prime Minister Sébastien Lecornu include 15,000 new university and trade school places, €1 billion in university funding over five years, and €4 billion in loans for school renovations. Nevertheless, planned protests continue, signaling public dissatisfaction with the pace and scale of government response.
While acknowledging the potential need for further measures, Lescure stressed that any new spending will have to be matched by equivalent savings to contain the budget deficit, which France aims to keep at 5 percent of GDP in 2027. The country’s public deficit stood at 5.1 percent in 2025, second only to Belgium within the Eurozone, and is expected to widen to 5.4 percent this year.
The yield on France’s 10-year government bonds reached 5 percent recently before easing after Moody’s decision, and the spread over German Bunds has roughly doubled in the past three months. Lescure attributed short-term market volatility to hedge funds unwinding carry trades that had bet on French bonds’ higher yields, intensifying selling pressure.
The government has proposed a budget that includes €43 billion in spending cuts and tax increases but lacks a parliamentary majority, facing numerous amendments and opposition attempts to reject key measures. Lescure dismissed concerns about the legislative impasse, noting the government’s willingness to employ constitutional tools such as Article 49.3 to pass the budget without a vote or even use decree powers, actions he argued would be legally legitimate rather than an institutional overreach.
Opposition parties have threatened to bring down the government if such tactics are used, underscoring the political stakes involved.
Lescure also urged French households to spend confidently, pointing to the nation’s relatively high savings rate of 17.9 percent at the end of 2025 as a potential driver of economic growth. “There’s hope, look up, France is not that bad,” he said, appealing for optimism amid ongoing challenges.