French Prime Minister François Bayrou has outlined his plans for the 2026 budget that include €43.8 billion in spending cuts and public spending freezes.
The wide-ranging measures include keeping public spending at current levels, abolishing two public holidays from the calendar, tax rises in a number of sectors, and as-yet undefined ‘solidarity contributions’ from higher income households.
Cuts to social security spending are also envisioned to help reduce the €15 billion debt in the sector, Mr Bayrou said in a press conference yesterday (July 15) evening.
He has been open about the need to find this sum for months and has continually stated that reducing the public debt is the cornerstone aim of his tenure - yesterday was the first time he formally outlined how the savings would be made.
“There are moments in the history of nations when they must have a ‘rendez-vous’ with themselves, and this moment is one of those,” he said.
“Everyone must participate in the effort, given the scale of the challenge,” he said, with his aim to reduce the French deficit to 2.8% of GDP in 2029, down from 5.8% where it is now.
To be enforced, however, the measures will need to be formalised in a finance bill for the year 2026 and voted on by parliament.
Fierce backlash from politicians both to the left and right – as well as those within the governing camp – means it will be an uphill struggle to get MPs to agree on the savings, and a vote of no confidence now looms over the prime minister when parliament returns in September.
If Mr Bayrou is ousted, France will again be thrown into political chaos.
Where will money come from?
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The key announcements made by the prime minister cover a number of sectors. A graph showing a breakdown of how much each measure is expected to save can be found in our article here.
The graphic below gives an overview of the key announcements, which are covered in more detail after.
Année blanche for public spending…
A cornerstone measure is to declare 2026 an année blanche, meaning all public spending will be frozen at current levels and many government measures tied to inflation will remain locked in at their 2025 amounts.
It means that funds for public sectors will not take into account inflation or any increased funding needs for 2026.
Social benefits including housing and family subsidies will also remain the same as in 2025, and will not be increased in line with inflation.
However, the prime minister announced there will be an exception for military spending, which will increase by €6.5 billion over the next two years.
All in all, an estimated €7 billion will be saved from freezing public spending at current levels.
Also for income tax bands…
Income tax bands will also be locked at 2025 levels and will not increase in line with inflation as is usual practice.
This is likely to result in hundreds of thousands of households which avoid paying income tax as their income is too low having to pay next year.
Others will see a greater proportion of their income placed in a higher tax band.
Mr Bayrou said the effects of a public spending freeze will be negligible on France’s purchasing power as inflation levels are expected to be low this year, which will also minimise the number of households impacted by locking tax bands.
Also for pensions - and retiree tax allowance
Pensions will also be frozen at current levels and not indexed to inflation.
Millions of pensioners will in effect lose out on the usual increase to pension sums next year.
A second blow to pensioners would be an end to the ‘abattement fiscal des retraités’ tax allowance all retirees are entitled to.
If abolished, up to 15 million pensioners could enter the first income tax bracket and in theory need to pay income tax (although further allowances are possible).
The 10% rate would instead be replaced with a flat €2,000 allowance per year aimed at preventing those pensioners with the lowest incomes from paying income tax.
Two public holidays removed from calendar
The prime minister also wants to reduce the number of public holidays in France by permanently removing two jours feriés from the calendar.
He proposed removing Easter Monday, “which has no religious significance”, and May 8 (the celebration of Allied victory in World War Two) as “the month of May has become a Swiss cheese where we jump from one holiday to another.”
Removing the Easter Monday holiday would make France the only country in the EU that did not have a public holiday on either Good Friday or Easter Monday.
Two extra days of working will generate billions in income, the prime minister said, yet it comes as no surprise that this is one of the most controversial measures in his budget plan.
However, Mr Bayrou said it was “just a suggestion,” and he was open to alternative ideas to find the same amount of money earmarked from the abolition of the public holidays.
Increase participation fees for healthcare, lower long-term illness coverage
To reduce healthcare expenditure, the prime minister is planning an overhaul of care for patients who suffer from a long-term illness (ALD).
One proposal would end 100% state reimbursement of medicine and medical care not related to the long-term illness patients are diagnosed with.
This covers the €1 solidarity payments made on medicines in France, not covered by social security or top-up mutuelle insurance.
The prime minister did not confirm if other thresholds such as the franchises for medical transport or the participation forfaitaire (solidarity payments for medical appointments) will also increase or face higher base charges.
Cut civil servant jobs
The prime minister wants the government “to set an example” for belt-tightening by cancelling general pay rises for civil servants, although those who receive a ‘career advancement’ such as a promotion will still see pay increase as usual.
He also said a third of retiring civil servants will not be replaced, and that 3,000 public sector jobs will be axed, with only trainee teacher roles remaining fully exempt from potential cuts.
Plans to remove or assimilate ‘unproductive’ government agencies into other groups will go ahead, which will further cut government spending.
Cut unemployment rate and spending
The prime minister said it was ‘not normal’ for a country “with so many jobs… to have an unemployment rate of 7%.”
Measures to reduce unemployment, as well as unemployment benefits would be discussed with social partners, with a view to changing rules and updating the labour laws surrounding unemployment benefits.
Former prime minister Gabriel Attal recently tabled a new law that would see the number of months benefits payments are paid to former workers reduced from 18 months to 15, and the number of months employees need to work before receiving unemployment increase from six to eight months.
Plans by President Emmanuel Macron to ‘merge’ several unemployment benefits may resurface.
A ‘solidarity contribution’ from wealthy households
The efforts to save money must be ‘fair’, the prime minister said, and to that effect he announced that a ‘solidarity contribution’ would be levied on high-income households.
However, he did not give any further information on how this money would be raised.
Mr Bayrou is also an advocate of bringing in ‘anti-optimisation’ rules that would limit wealthy individuals from using tax loopholes or otherwise structuring income to minimise the amount of tax they pay on it.
