French Prime Minister Sebastien Lecornu tabled a belt-tightening 2027 budget on Thursday, built around 54 billion euros of savings and tax increases, aiming to cut the deficit from 5.4 percent of economic output this year to 5 percent in 2027.
The plan lands in a hostile setting. Violent student protests have spread across French high schools and universities for over a week, the 10-year bond yield hit nearly 5 percent on Thursday, its highest level since July 2002, and Lecornu’s government has no clear parliamentary majority. France’s national debt reached a post-war record of 119 percent of output in the second quarter, according to the INSEE statistics office.
Without cuts, Lecornu told Le Figaro, the deficit would reach 6.5 percent of GDP, making it impossible to keep the promise to the European Commission to bring the figure to 3 percent by 2029. The formal deadline for submitting the finance bill to the National Assembly is October 6.
What is in the budget
According to a plan seen by AFP, the government counts 43 billion euros in recovery measures, with the total effort in 2027 reaching 54 billion euros. Public sector wages would be frozen, and pensions would be frozen for everyone except the lowest brackets. The plan also aligns some benefit rights for foreign residents and slows the growth of health insurance spending, one of the fastest-growing lines in recent budgets.
Revenue measures carry much of the load. VAT receipts would rise by more than 7 billion euros compared to this year, and income tax receipts by 5.7 billion. Corporate tax revenue would fall by 1.8 billion, a choice consistent with the government’s pro-business line. Net tax revenue in the state budget would reach 375 billion euros, up 18 billion on the year.
One measure worth 3.8 billion euros in 2027 targets a specific tax relief, and a freeze on tax relief for low-wage payroll contributions raises another 2.9 billion, according to Reuters’ summary of the bill. Defense spending bucks the trend, rising from about 64 billion dollars to 71.2 billion. Lecornu also said the country needs an additional 10 billion euros to finance its debt, a line item that grows every year as cheaper bonds issued in the last decade roll over at current rates. Interest costs are on track to become one of the largest single items in the French budget, ahead of what the state spends on some ministries.
Bond market pressure
The budget was drafted for an audience of bond investors as much as voters. French 10-year borrowing costs reached nearly 5 percent on Thursday, and the global bond rout pushed US Treasury yields to a 24-year peak the same day. France’s premium over German bunds has widened through the year as successive governments struggled to pass durable budgets.
The timing is not accidental. Previous French governments fell over budget votes, including the one that collapsed in 2024 over deficit plans. Lecornu’s team has tried to spread the pain across wages, pensions, benefits and health spending rather than concentrating it, hoping no single bloc can mobilize against the whole package. The government’s own messaging, that France will never default but can face a crisis, sums up how it reads the market.
Protests on the streets
The same day the budget was tabled, around 30 university campuses were blocked, the Student Union said, including sites in Paris, Strasbourg, Marseille, Lyon, Reims, Poitiers and Nanterre. High schools were blockaded in several cities, and fires broke out at schools in Aubervilliers outside Paris.
Wednesday’s unrest saw 625 people detained during high school blockades, Interior Minister Laurent Nunez said, with 83 police officers and gendarmes wounded. Education Minister Edouard Geffray counted 119 injured students and school staff since the blockades began. Nearly 2,000 people have been arrested in total, and a crisis cabinet meeting was convened on Thursday morning.
President Macron condemned the violence and criticized hard-left politicians he accused of legitimizing it, while the education ministry prepared a consultation platform for high school students to submit demands. Protesters cite crumbling school buildings, overcrowded classrooms and cuts. One 17-year-old in Strasbourg described 35 students per classroom, water leaks and a cafeteria too small for the school, and said there was no budget and no resources. Further demonstrations are planned for October 6, the same day the bill is due in parliament.
Reuters reported that intelligence agencies briefed the crisis meeting that the hard-left party was behind the protest wave, a claim the party rejects. The characterization matters for the budget fight, since the government can use it to argue the protests are political rather than a genuine spending grievance.
The math ahead
The deficit target of 5 percent for 2027 assumes this year lands at 5.4 percent, slightly better than the 5.5 percent the government had already conceded. The original plan had been 4.7 percent this year. Inflation ran at 3.4 percent in September, which helps nominal tax receipts but squeezes the households the budget asks to absorb frozen wages and pensions.
Passage is the hard part. The government’s opponents span the hard left, the Greens, parts of the center and the far right, and each has its own list of demanded changes. A no-confidence vote remains the ever-present risk, and bond investors will watch the October 6 session for any sign the arithmetic is coming apart before the text is even debated. Lecornu has staked his government on getting through the year without one.
Whatever parliament does to the draft, the direction is set. Every feasible amendment adds spending, and the Commission’s 3 percent target for 2029 already assumes two more years of consolidation after this one. The gap between what French politics will accept and what the bond market demands is the story of this budget, and October 6 will show how wide it still is.