France’s 2025 State Spending Plans

PARIS (Reuters) – France’s caretaker government has set 2025 state spending at current levels, saving about €10 billion ($11.08 billion) after accounting for inflation and maintaining the deficit reduction target, according to the prime minister’s office.

President Emmanuel Macron has yet to appoint a new government following a snap legislative election in early July that resulted in a hung parliament. Consequently, the current administration is drafting a budget that may be significantly modified by its successor.

Outgoing Prime Minister Gabriel Attal communicated the 2025 spending limits to each ministry on Tuesday, maintaining overall state spending at €492 billion, unchanged from this year’s budget law, as confirmed by an official in Attal’s office.

This indicates a budget tightening of around €10 billion, as spending would typically be permitted to rise at least at the inflation rate. Additionally, approximately €20 billion in emergency spending cuts from this year will also be carried over into 2025.

“The prime minister is particularly mindful about restoring public finances,” the official stated, noting the need for France to adhere to the outgoing government’s goal of reducing the overall public sector budget deficit to below 3% of output by 2027.

As an initial step, the current administration aimed to lower the budget deficit from an estimated 5.1% of GDP this year to 4.1% in 2025. However, the official mentioned it is too soon to determine if that target will be maintained, as the social spending budget is still in preparation.

Military spending is expected to be one of the few budgets to increase next year, while funding for employment support will be diminished due to relatively low unemployment rates, the official noted.

Macron is scheduled to meet with party leaders on Friday to appoint a prime minister entrusted with forming a coalition government. The new government’s primary task will be to pass a budget by year-end in a heavily divided parliament.

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