French PM plans modest reduction in budget deficit to around 5% of GDP

French Prime Minister Sébastien Lecornu is preparing only a modest reduction in the country's budget deficit next year, targeting around 5% of GDP and abandoning the previous 3% threshold.

According to Report's European bureau, citing French media, the government plans to submit the draft budget to parliament on September 30, one week ahead of the statutory deadline.

The government reportedly aims to achieve a "realistic" reduction in the deficit to 4.9% of GDP without major structural reforms or new taxes.

This effectively means abandoning the previous goal of bringing France's deficit below the EU's 3% limit by 2029.

The government is seeking to reduce the deficit while ensuring that the budget is adopted before the end of the year. In each of the past two years, domestic political crises resulted in France entering the new year without a full budget law.

The government faces three key questions: how far to reduce the deficit, what to do with taxes, and where to find spending cuts. One option under consideration is partially limiting pension indexation, a potentially highly politically sensitive issue.

France has remained one of the EU countries with the highest budget deficits for several years. Brussels is urging Paris to accelerate fiscal consolidation, but political instability and public resistance to austerity measures are complicating major budget reforms.