The government’s commitment in the 2026 budget is a deficit of 4.6% of GDP compared to 5.4% in 2025. A saving of almost 44 billion compared to 2025.
The long-term goal is to stabilize public debt. According to Prime Minister Matignon, this trajectory is associated with a public deficit of 2.8% of GDP in 2029.

Three points

𝟭- 𝗧𝗵𝗲 𝗣𝘂𝗯𝗹𝗶𝗰 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗠𝗼𝗺𝗲𝗻𝘁𝘂𝗺

The increase in public debt under the Macron presidency is mainly associated with an excessive balance of the primary deficit (the primary balance is the balance of public finances excluding payment of interest on the debt).
This reflects a very sharp increase in spending. The rationale is to explain that the uncertainties were significant (pandemic, energy crisis) and that the government’s role was to limit the risk for businesses and households.

Over the same period, very low interest rates, lower than the nominal growth rate of the economy, had the opposite effect, pulling debt down.

To embark on a virtuous trajectory, we cannot rely exclusively on very low interest rates and/or a hypothetical and lasting rebound in growth.
Therefore, the only possibility to reduce the deficit and stabilize the debt is to compress the amount of the primary budget deficit by reducing expenditure, because the rate of compulsory levy, which could be a lever, is already very high.

If spending must be reduced, what areas will these cuts affect, knowing that military spending will increase over time (and normally also spending linked to the energy transition)?
The equation is two-fold: first on the reduction of overall expenditure, then on the arbitration in the structure of expenditure.
Who will bear the smallest expenses (social? education? security?…)?
Details are not yet available, but there is no doubt that this will be a key element of the debate in Parliament.

𝟮- 𝗣𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗦𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆

If the budget is not passed, the government will not be able to remain, paving the way for a period of political instability and economic uncertainty. The dissolution of 2024 was not the expected remedy.

𝟯- 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻

The risks associated with the budget, but also with the social tensions expected for September 10, worry investors.
As a result, the 10-year interest rate gap between France and Italy, where the government appears more stable, is narrowing very quickly to less than 10bp now.

France is becoming a subject of questioning, which is weakening the Franco-German couple which is historically at the heart of European construction.
As Europe is being challenged on a global scale, this French divergence is not desirable, but will the government be able to deal with it?