French Budget Requests Total €10 Billion, Minister Says
(Bloomberg) -- Requests to amend France’s 2025 budget as the government of Prime Minister Michel Barnier battles to remain in power would cost almost €10 billion ($10.6 billion), the nation’s budget minister said in an interview with Le Parisien.
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“The compromise on the taxation of electricity is not fully financed, and I don’t want this to be done by increasing the taxation of gas,” Laurent Saint-Martin said the interview published Saturday, describing revisions sought by Marine Le Pen’s far-right National Rally party and others.
Le Pen, whose party has the most seats in parliament, has stepped up threats in recent days to bring down the government in a no-confidence motion unless changes are made to the budget bill. The National Rally set out further demands for changes even after Barnier dropped plans to raise taxes on electricity in a key concession to the far right.
National Rally lawmaker Jean-Philippe Tanguy told Les Echos newspaper on Saturday that the party would back a no-confidence motion if the government doesn’t increase pensions in line with inflation. The RN also wants Barnier to abandon a proposal to reduce drug reimbursements, Marine Le Pen stressed in an interview with La Tribune on Sunday.
“What I want is for the French people and their economy not to be bled dry,” she said. “Discussions have been going on for a fortnight, but obviously things are not progressing as we would like.”
Lawmakers had sought to plug widening holes in public finances and reassure investors in the budget for next year. But passage of the bill, helmed by Barnier, has been in doubt as his government lacks a majority in parliament.
Because opposition parties in France conventionally also vote against the final version of a government’s finance bill, Barnier has said he would probably have to rely on a constitutional provision known as the 49.3 to adopt the budget without putting it to a parliamentary vote. Opposition lawmakers on the left have threatened to table a no-confidence motion once that happens.
The prime minister will need to push through the social security portion of the new budget as soon as Monday via 49.3, potentially opening him up to being evicted from his job within days.
The budget concerns have triggered a selloff in French assets, driving up the country’s borrowing costs relative to European peers.
The mounting political risks have put France’s bonds under renewed pressure over the past two weeks. The gap between French and German 10-year bond yields — a widely watched measure of risk — at one point hit 90 basis points, the highest level since 2012. That premium narrowed to 81 basis points in the final minutes of trading on Friday, as money markets priced in faster interest rate cuts from the European Central Bank.