Finance
France must squeeze spending or risk market backlash, says auditor
Published by Global Banking & Finance Review®
Posted on July 2, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 2, 2025
2 min readLast updated: January 23, 2026
France must reduce spending to avoid market backlash. The audit office warns of potential debt crisis if budget deficit isn't controlled.
PARIS (Reuters) -France needs to get its public finances back on track this year or risk pressure from unforgiving financial markets to do so in the future, the national public audit office said on Wednesday.
Centrist Prime Minister Francois Bayrou is struggling to get public finances back under control after spending spiralled higher last year and tax income fell short of expectations.
France saw its budget deficit expand further than any other euro zone country last year as a snap legislative election delivered a hung parliament, making bold decisions to correct the deterioration all but impossible.
"We have a choice between making a voluntary effort now or suffering austerity tomorrow," the Cour des Comptes audit office head Pierre Moscovici said, adding markets were watching for missteps.
As a first step to getting the budget deficit back to an EU limit of 3% of output by 2029, the government aims to reduce the deficit to 5.4% of GDP from 5.8% last year, a target Moscovici described as "reachable but fragile".
Bayrou, a long-time debt hawk, has said he would outline plans in mid-July to cut spending by 40 billion euros next year to reduce the deficit to 4.6%.
In France's deeply-divided parliament, opposition parties on the far-right and left are watching closely and could easily topple Bayrou's government as they did with his conservative predecessor, Michel Barnier.
With interest payments on France's debt set to become the single biggest expense in the budget by the end of the decade, Moscovici warned that simply meeting the EU deficit target would not be enough to ward off a debt crisis.
"To truly guarantee the sovereignty of the French debt, it is essential to return to a primary surplus, which is a prerequisite," Moscovici said.
(Reporting by Leigh ThomasEditing by Alexandra Hudson)
The national public audit office recommends that France needs to get its public finances back on track this year to avoid future pressure from financial markets.
The government aims to reduce the budget deficit to 3% of output by 2029, starting with a reduction from 5.8% to 5.4% of GDP this year.
If France fails to control spending, it risks suffering austerity measures in the future, as highlighted by Pierre Moscovici from the Cour des Comptes audit office.
Prime Minister Bayrou plans to outline spending cuts of 40 billion euros next year to reduce the deficit to 4.6%.
A critical concern is that interest payments on France's debt are set to become the largest expense in the budget by the end of the decade, necessitating a return to a primary surplus.
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