The expansion of the budget of 2026 of the second largest economy in the euro zone will prove to be a “demanding” task, said French Economic Minister Eric Lombard from CNBC by Charlotte Reed from CNBC after the legislator at the beginning of this month from 2025 according to a flood of turbulent, State toping finally adopted attempts.
France has drawn a trajectory to reduce its public deficit to reach 5.4% of national GDP in 2025 and to decrease under 3% in 2029, said Lombard. According to the issue of the European Union, Member States must keep their deficits below 3% of GDP.
“2026, yes, it is a very demanding budget because we continue to reduce the deficit and of course under 5.4%and probably less than 5%,” the Economics Minister told CNBC on Monday and noticed that it was the last goal has not been carved in stone.
“We will work with all political parties … to speak to us. We also go to work with the unions, with the employers in order to achieve a consensus about the main guidelines that are key to the country and guidelines,, to which we can make adjustments that enable us to spend less in 2026, ”he said.
The lack of a budget and broader instability in French politics has shown in markets in recent months. Lombard admitted a “negative impact on growth” and expressed hope that investors will now return to France.
The country's economic output shrank in the fourth quarter with a contraction of 0.1%, compared to the growth of 0.4% in the previous three months, with the Bank of France a lean increase of 0.1-0.2 in the first quarter % in national GDP awaited, as expected increases increased in the first quarter, according to its latest monthly business survey, the market service and the energy sector were increased. The International Monetary Fund assumes that the French economy will grow by 0.8% throughout 2025.
Pension reform
Now the budget has been completed, the focus is on the fate of the discussions about the controversial – and highly contested – 2023 pension reform of the French President Emmanuel Macron, which is to gradually increase the retirement age from 62 to 64 to keep the system solvent .
France's new Prime Minister Francois Bayrou has signaled that the legislation could return to the agenda – and offers a litmus test for those who observe the efforts of France to contain its deficits.
“I fully trust the representatives of the workers and the employer,” Lombard told CNBCs Reed. “And so you know that your responsibility is to find adjustments … and you have three months to do this, hopefully already in the law this year.”
The FITCH evaluations at the beginning of this month met a negative tone about a possible cancellation of the legislation.
“Every return speed of the reform could undo part of the planned fiscal consolidation in the medium term and be moderately negative for the medium -term fiscal outlook. From our opinion. Fitchrating rings warned in a note on February 10.
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