Spending Cuts

Bayrou’s stated goal is to bring France’s deficit-to-GDP ratio to 4.6 percent by the end of 2026, down from the 5.8 percent recorded at the start of 2025. That’s still well above the 3 percent deficit target stipulated by the European Union’s budget rules. But with economic activity trending downward because of stiff global headwinds, there’s a considerable risk that a retreat of state spending could in fact worsen the country’s economic bind.

The core of Bayrou’s plan is a significant reduction of public expenditure, totaling some €28 billion of the €43.8 billion in total savings. Local authorities are called on to make €5.3 billion worth of budget cuts. To restrict the total number of civil servants employed by the state, Bayrou wants to see a gradual phaseout of many government posts, with one in three retiring functionaries not replaced by new hires.

Retirees and welfare recipients are hit especially hard. The largest share of savings is drawn from a freeze of automatic spending in the form of welfare and pension disbursements. While avoiding calls for special taxes on the wealthiest retirees, Bayrou’s plan will see a year-long freeze on inflation adjustment for such benefits — expected to total just over €7 billion in savings.

Not all state budget items are set to be tapered next year. At the express request of President Emmanuel Macron, Bayrou’s budget outlines provide for a €3.5 billion increase for the defense ministry, with an additional €3 billion increase expected in 2027. When Macron entered office in 2017, the defense budget totaled €32 billion. Today, it exceeds €50 billion and is slated to rise to €64 billion by 2030.

Next year’s increase in defense spending is more than compensated for by the €4.2 billion in state revenues estimated to come from the cancellation of two national holidays—Easter Monday and the May 8 Victory-in-Europe holiday. Blasted by the Left and far right alike, Bayrou is selling the move as an attempt to “reconcile the French with work.” In that, it feeds on the spurious narrative that the average French person works considerably less than their European peers. An employed French worker will in fact work a hundred hours more in a given year than their German counterpart, according to the Organisation for Economic Co-operation and Development (OECD).  With eleven bank holidays, France is already below the European Union average.

Red Lines

Pinned down by the “no-tax-hikes” obsession within his own centrist-conservative coalition, Bayrou was cautious to avoid anything that smacks of new taxation. His proposals for new revenue would see the end of certain loopholes, likewise freezing inflation-adjustment tweaks in the calculation of tax brackets. In total, the revenue measures are estimated expected to bring in just shy of €16 billion.

Yet even these modest adjustments have prompted complaints from key figures in Bayrou’s coalition. Laurent Wauquiez, National Assembly caucus leader of the center-right Républicains and technically an ally of Bayrou, is calling for a 2026 budget that would draw “100 percent” of savings from spending cuts.

The most important element of Bayrou’s budget plan is what it doesn’t include. The Right and center often like to complain that among OECD countries France draws on the highest share of national income in the form of tax receipts or payroll charges. Yet this is itself revelatory of a certain exhaustion of the tax-and-spend model undergirding the post–World War II welfare state — and the fact that the real reservoirs of wealth and income are not being taxed.

In June, the Senate shot down a commonsense proposal to tax the country’s largest fortunes. The so-called “Zucman tax,” named for French economist Gabriel Zucman, would have established a 2 percent levy on fortunes valued at over €100 million. The measure had been approved in the National Assembly this winter: thanks to the abstention of the far-right Rassemblement National and its allies, the left-wing Nouveau Front Populaire (NFP) was able to outnumber Bayrou’s governing coalition. Drawing on a mere eighteen hundred households, the Zucman tax was estimated to bring in some €20 billion in annual revenue. The Senate has blocked that from happening.

Opposition or Stability?

Everything is in place for Bayrou’s budget to encounter stiff resistance when it comes up for debate this fall, after the summer recess. Without a majority in the National Assembly, the premier will almost certainly have to fall back on a special constitutional power, the infamous article 49.3, in the hope of bypassing an up-or-down vote. Doing so would expose his government to a potentially fatal no-confidence vote, however. Last December, Bayrou’s predecessor Michel Barnier was brought down during a similar budget vote, having proposed similar freezes on retirement disbursements that pushed the Rassemblement National to support the NFP’s no-confidence motion.

Weeks later, in early February, the far right and the center-left Parti Socialiste abstained from a no-confidence vote over Bayrou’s rehashed 2025 budget. For now, figures in both of these camps are trying to cultivate strategic ambiguity before the 2026 budget battle truly picks up.

The Rassemblement National remains caught by the need both to appear as an opposition force and to avoid alienating those in the corporate world who yearn for stability. Layered over that tension is the anger following longtime leader Marine Le Pen’s conviction for embezzlement earlier this spring, which as it stands would leave her unable to seek office for five years. That ruling could spur her party to caution, out of fear of provoking a dissolution and snap elections that could follow the collapse of Bayrou’s government. Or it could encourage the party to throw its weight behind aggravating France’s crisis — and picking up the political pieces afterward.

More broadly, the far-right leadership is blasting a budget that it claims doesn’t do enough to unwind welfare spending for France’s immigrant population. “If François Bayrou doesn’t re-work [his budget], we’ll vote to no-confidence him,” Le Pen wrote on X shortly after the premier’s address on Tuesday.

If the Rassemblement National turns on Bayrou this time, his last line of defense will be the Parti Socialiste. Yet in recent weeks, this center-left force has tacked back toward the opposition, after the failure of Bayrou’s retirement reform “conclave.” These discussions had been organized in the name of drafting revisions to Macron’s controversial 2023 increase in the pension age, but they soon ran aground. Bayrou’s hope now is that his small tweaks to tax loopholes and an exceptional “solidarity” contribution from high earners will be enough to lure the Parti Socialiste to his side. However, the party’s leader, Olivier Faure, has sought to temper those expectations. “As it now stands, the only conceivable outcome is a no-confidence vote,” Faure said on Tuesday.

Perhaps even Bayrou’s allies are tempted to throw in the towel. The premier finds himself at rock bottom in approval ratings. Meanwhile, as Macron’s presidency enters its twilight, the parties in Bayrou’s coalition are jockeying for position in the battle over the succession. There’s little to ensure discipline among the warring parties of the center.  Some 59 percent of the French public would like to see a new prime minister, according to an IPSOS poll published on July 18. As of now, 44 percent view a new dissolution and snap elections as the best way out of the impasse.