France's PM wants to scrap two public holidays to help fix government finances

By Leigh Thomas and Elizabeth Pineau

PARIS (Reuters) -French Prime Minister Francois Bayrou proposed scrapping two public holidays and freezing most public spending as part of a 43.8 billion euro ($50.88 billion) budget squeeze he outlined on Tuesday.

Bayrou's plan involves freezing welfare spending and tax brackets in 2026 at 2025 levels, not even adjusting for inflation, which was immediately criticised by left-wing and far-right politicians. Defence spending, however, will increase.

France saw its budget deficit hit 5.8% of gross domestic product last year, nearly double the official EU limit of 3% of GDP, as a political crisis left four successive governments paralysed and incapable of tackling an unexpected drop in tax income and surge in spending for a second year.

"Everyone will have to contribute to the effort," Bayrou said in a two-hour news conference with journalists, lawmakers and ministers, warning that public debt was a "mortal danger" for France and needed to be tackled head on.

The welfare spending freeze will likely be as unpopular for many voters as scrapping two public holidays - possibly Easter Monday and May 8, which commemorates the end of the Second World War in Europe.

There are simply too many public holidays in May, and the French must get back to work that month, Bayrou said, adding that this would mean several billion euros in additional revenues for the state, as everybody would work more and produce more.

"This government prefers to attack the French people, workers and retirees, rather than root out waste," far right National Rally leader Marine Le Pen said on X.

"If Francois Bayrou does not revise his plans, we'll vote for a motion of no confidence against him."

Left-wing parties were also damning. The Socialists leader Oliver Faure, whose party helped Bayrou pass the 2025 budget, said: "This isn't a recovery plan it's a demolition plan for the French (social) model."

Bayrou, a veteran centrist politician, must persuade the opposition ranks in France's fractured parliament to at least tolerate his cuts, or risk facing a no-confidence motion like the one that toppled his predecessor in December over the 2025 budget.

Any risk of a no-confidence motion would likely only firm up once a detailed budget bill goes to parliament in October.

MACRON'S LEGACY

President Emmanuel Macron has left Bayrou the task of repairing the public finances with the 2026 budget, after his own move to call a snap legislative election last year delivered a hung parliament too divided to tackle the country's spiralling spending.

If he fails, a new political crisis could trigger more credit ratings' downgrades and drive up the cost of interest payments, which are already set to become the single biggest drain on the budget at over 60 billion euros.

In the final two years of his second term, the dramatic deterioration of the public finances, which has left France with the biggest budget deficit in the euro zone, may tarnish Macron's legacy.

Then a political outsider, he was first elected in 2017 on promises to break the right-left divide and modernise the euro zone's second-biggest economy with growth-friendly tax cuts and reforms.

Successive crises - from protests, COVID-19 and runaway inflation - have shown he has failed to change the country's overspending habit, however.

Bayrou aims to reduce the budget deficit from 5.4% of GDP this year to 4.6% in 2026, ultimately targeting the EU's 3% fiscal deficit limit by 2029.

"It's the last stop before the cliff, before we are crushed by the debt," Bayrou said on Tuesday.

($1 = 0.8608 euros)

(Additional reporting by Sudip Kar-Gupta; Writing by Leigh Thomas and Ingrid Melander; Editing by Susan Fenton and Ros Russell)