France lowers spending cut target

PARIS (Reuters) -France's new government set on Wednesday a lower target for spending cuts this year than its predecessor as it races to get a 2025 budget passed by the end of the month.

The budget bill has been stuck in the Senate since lawmakers in the lower house ousted the previous government over parts of its belt-tightening push, which they considered went too far.

Budget Minister Amelie de Montchalin said the new government aimed to revive the bill in the Senate and get it passed by both houses by the end of the month.

It would be revised to target up to 32 billion euros ($33 billion) in spending cuts, down from the 40 billion the previous government had sought. Meanwhile, the government is expecting 21 billion euros extra income by clamping down on tax avoidance.

"It's the biggest effort to cut spending in 25 years," Montchalin told TFI TV, adding it was necessary in order to avoid raising taxes more broadly on middle and lower-income households.

With successive governments' poor track-record sticking to their fiscal goals, central bank head Francois Villeroy de Galhau urged the new government to spell out in detail how it expected to meet its deficit-reduction target.

Outlining his policy priorities to parliament, Prime Minister Francois Bayrou said on Tuesday the public sector budget deficit was now expected to be 5.4% of economic output this year, setting an easier target than his predecessor Michel Barnier's 5% goal.

Barnier's government collapsed last month when opposition lawmakers furious over his spending cuts passed a no-confidence motion, leaving France with only a stopgap budget until more permanent legislation is passed.

Bayrou has sought to avoid a similar fate by opening the door to renegotiating disputed pension reform in a bid to win over left-wing lawmakers he needs to pass the 2025 budget.

($1 = 0.9713 euros)

(Reporting by Leigh Thomas. Additional reporting by Dominique Vidalon. Editing by Sudip Kar-Gupta and Mark Potter)