France’s new PM faces first big test as he spells out key budget plans

France’s new prime minister François Bayrou is addressing politicians through a general policy speech meant to outline his top priorities, including key budget decisions, one month after stepping into his new role.

France’s new prime minister, François Bayrou, is facing his first major test at parliament on Tuesday as his government has no majority amid unprecedented political instability.

Bayrou is addressing politicians through a general policy speech meant to outline his top priorities, including key budget decisions, one month after he was appointed by President Emmanuel Macron.

What is Bayrou proposing?

Bayrou urgently needs to pass a budget bill for 2025. Following the collapse of the previous government, an emergency law has been approved to enable the state to levy taxes from 1 January, pay basic expenses and avoid a shutdown.

But only a proper budget would help reduce France’s deficit and allow key expenses such as defence measures needed amid the war in Ukraine or aid promised to farmers.

Financial markets, ratings agencies and the European Commission are pushing France to comply with EU rules limiting debt and keep France’s borrowing costs from spiralling. That would threaten the prosperity of eurozone countries.

France’s deficit is estimated to reach 6% of its gross domestic product in 2024. Finance Minister Éric Lombard said last week the government is “aiming for a deficit of between 5 and 5.5%” this year.

When he took office, Bayrou said that “no one knows the difficulty of the situation better” than he does, comparing the challenges faced to a “Himalaya” climb.

Can the government be toppled again?

Bayrou’s Cabinet relies on a fragile deal between Macron’s centrist allies and conservatives of The Republicans party who, even with their combined strength, do not have a parliamentary majority.

The previous government was in place for only three months before being brought down by opposition politicians from both the left and the far right amid a budget dispute.

To avoid a repetition of that scenario, Bayrou wants to secure a nonaggression pact with the Socialists so that they will not support any future move to topple the government.

The Socialists said they are open to talks on the condition that they will include negotiations on Macron’s unpopular pension reform that passed two years ago.

However, the possibility of another no-confidence vote is still looming.

The hard-left France Unbowed party refuses to enter into talks with the government and has already announced it will file a no-confidence motion.

A vote later this week would have little chance of succeeding as the far right appears unwilling to support such move in the immediate term.

Yet the question could be raised again during the future budget debate at parliament, with more uncertainty on the result.

Why pension reform talks are key?

Macron’s plan to raise the retirement age from 62 to 64 unleashed months of mass protests from January to June 2023 that damaged his leadership. The legislation, which has gradually started being implemented, also requires people to work 43 years to receive a full pension.

The Socialists are now urging Bayrou to announce a “suspension” of the reform in order to provide time to renegotiate it, with the aim of backtracking on the age of 64 and introducing specific measures for those who have long careers and certain professions considered to be hard work.

A suspension, if it were to be announced, would prompt anger on the other side of the political spectrum, possibly weakening Bayrou’s government even further.

The conservative Senate president, Gérard Larcher, has warned that the pension measures shouldn’t be suspended or rescinded.

“If we were to repeal the pension reform, the cost would be €3.4bn in 2025 and almost €16bn in 2032”, he said.

Does the far right still have leverage?

Far-right leader Marine Le Pen – Macron’s fiercest rival – was instrumental in ousting the previous government.

Bayrou consulted her when forming the new government, and Le Pen remains a powerful force. Her National Rally party has the largest single group in the National Assembly, France’s powerful lower house of parliament.

In recent days, Bayrou’s government sought to sideline Le Pen by negotiating instead with the Socialists, the Greens and the Communists on budget issues.

The president of the National Rally, Jordan Bardella, has criticised those talks and warned Monday that his party will oppose any budget that would raise the cost of medication, provide more health care for migrants staying illegally in the country and impose new taxes on businesses.

Such measures would justify a no-confidence vote, he said.

Le Pen, meanwhile, faces her own headaches in the months to come – a March court ruling over alleged illegal party financing could see her barred from running for office.