French government announces major austerity measures for 2027 budget

French Prime Minister Sébastien Lecornu has announced a comprehensive austerity package as part of the state budget for 2027, aimed at addressing the country's worsening fiscal position. With the 2026 deficit estimated at 5.4% of GDP and rising debt-servicing costs due to higher interest rates, the government plans to implement budget cuts totaling 54 billion euros. Without these interventions, officials warn the deficit could escalate to 6.5% of GDP in 2027, far exceeding the government’s target of 5%.

The proposed measures include a freeze on public sector wages, reforms to sick leave policies, and adjustments to the pension system, such as limiting cost-of-living adjustments and reducing tax deductions for retirees. The latter is expected to generate an additional 1.4 billion euros. Furthermore, the state faces an extra 10 billion euro burden for debt servicing this year.

The budget plan is scheduled to be formally submitted to the National Assembly by October 6, 2026. However, the government faces significant political uncertainty and potential challenges due to the fragmented nature of the current parliament, which complicates the implementation of these unpopular reforms ahead of the 2027 presidential elections.