French Prime Minister’s 2025 Budget Proposal

PARIS (Reuters) – French Prime Minister Francois Bayrou will utilize constitutional powers on Monday to advance the much-delayed 2025 budget, likely instigating a vote of confidence later this week.

Main Targets and Measures in the Bill

Macro Targets

• The budget bill aims to reduce the public deficit to 5.4% of economic output this year from an estimated 6% in 2024, raising the target from 5.0% under the previous government.
• It anticipates overall budget savings of around 50 billion euros ($51.2 billion), made up of 30 billion in spending cuts and 20 billion in tax increases.
• The budget is based on a 2025 growth forecast of 0.9%.

Taxes

• Companies with annual revenue over 1 billion euros will face an exceptional levy this year, expected to raise 8 billion euros.
• Individuals with income over 250,000 euros per year will pay an additional temporary tax projected to generate 2 billion euros. This tax will be replaced with a new mechanism to discourage tax avoidance.
• France’s financial transaction tax will increase to 0.4% from 0.3%, and a new tax on share buybacks will be introduced.
• The tax on economy-class airplane tickets within Europe will rise to 7.3 euros from 2.63 euros.

Spending

• The bill aims for a 2% decrease in overall state spending, marking the first nominal spending reduction in 25 years.
• However, spending cuts will be less severe than under the previous government, with concessions made to court Socialist lawmakers.
• Notably, 4,000 teacher jobs will be retained despite a decrease in the school-age population, funded by reallocating resources within the education budget.
• The sports ministry and the organic food agency will avoid planned budget cuts.

($1 = 0.9759 euros)