France’s long struggle with its budget deficit—the largest and most persistent in the eurozone—has already claimed one government, and the pressure to fix it is mounting.
On Tuesday, the EU backed France’s roadmap to bring its finances under control by 2029. Prime Minister François Bayrou, however, faces a precarious path forward. His predecessor, Michel Barnier, was ousted in December after his austerity plans unraveled in parliament, where lawmakers rebelled over sweeping cost-cutting measures.
EU Economics Commissioner Valdis Dombrovskis described France’s revised plan as ambitious but less aggressive than Barnier’s failed proposal. “Overall, France maintains a level of ambition over a seven-year period, albeit in a less frontloaded way,” Dombrovskis said, comparing the two strategies.
The broader EU package outlined this week includes fiscal plans for several high-deficit countries—France, Belgium, Italy, Malta, Poland, Slovakia, and Romania—under rules reintroduced post-Covid with added flexibility.
France’s commitment involves major overhauls, including reforms to pensions, unemployment insurance, and renewable energy. But President Emmanuel Macron’s party lacks a legislative majority, forcing Bayrou to navigate an uneasy dance with both leftist and far-right factions.
At the heart of the crisis is France’s ballooning deficit, which hit 6.2% of GDP in 2024—more than double the eurozone’s 3% limit. Efforts to bring it down have already led to friction. Bayrou has had to soften his approach to win over left-leaning MPs, scaling back €40 billion in proposed cuts.
Just last week, Bayrou survived a no-confidence vote by walking back deeply unpopular pension reforms championed by Macron and halting plans to cut 4,000 jobs in public education.
The shadow of Barnier’s government looms large. His administration collapsed after just three months, a casualty of internal divisions and public backlash. Barnier’s finance minister, Antoine Armand, was replaced in December by Eric Lombard, a seasoned banker with experience at BNP Paribas and Generali. Lombard attended his first EU meeting this week, where he emphasized that the budget would require shared sacrifices but was “in the interests of the country.”
For Bayrou, the balancing act is clear: push through reforms that satisfy Brussels while avoiding the political landmines that brought down his predecessor.