France was able to stave off an economic catastrophe during the pandemic and when energy prices shot up at the outset of the full-scale war in Ukraine, in part thanks to massive public spending. Finding a consensus on reining in expenditures has proven difficult, and lawmakers are loath to tighten their belts as aggressively as Bayrou wants.
His plan would bring France’s budget deficit down from a projected 5.6 percent of GDP this year to 4.6 percent in 2026. The ultimate goal is to bring that figure down to 3 percent, as required by EU rules, by 2029.
Financial institutions and rating agencies have repeatedly warned of consequences should France fail to act, some of which are no longer hypothetical.
Borrowing costs are rising, with the yield on France’s benchmark 10-year bonds ― a useful indicator of faith in a country’s finances ― drifting away from historically safe Germany’s yields and toward those of Italy, a country long synonymous with reckless spending and unsustainable debt.
Getting the French to tighten their belts has so far proven to be Mission Impossible, but the situation is not yet so dire that it’s time to call in the IMF.
Bayrou, however, is betting his political future that history will prove him right.