Back in February, François Bayrou's government managed to pass a thorny but unconvincing budget for 2025. Since then, you have rightfully forgotten about this topic: speculation about a potential new snap election (and tariffs, of course) took centre stage recently.
However, public finances remain the most critical and structural sticking point in French politics right now. Nothing has changed since last year's snap election. Over the medium term, France still has to deliver its largest fiscal adjustment of the past 70 years to stabilise its debt-to-GDP ratio, namely 3.0-4.0% of GDP.
At the end of March, INSEE said that France's 2024 general government budget deficit was 5.8% of GDP (or c.EUR170bn). This figure is narrower than the government's (and our) latest forecast of 6.0%. We still expect that the government's target of 5.4% would be missed in 2025, but by a lesser extent than previously anticipated. Risks are now more tilted to the upside on this deficit figure but we consequently revised down our 2025 public deficit forecast to 5.6% of GDP (previously 6.0%).
Finally, we look at the possible future lever to solve this issue. French public spending amounted to 57.0% of the GDP in 2023, 7.5ppt more than the Eurozone average. This gap mainly comes from pensions (2.2ppt more than the average) and healthcare (1.5ppt). Without tackling these issues, any substantial fiscal consolidation would remain remote and the debt-to-gdp ratio will continue on its upward path.

This note was finalized on april 24, 2025