France braces for tough budget talks as bond yields hit 2008 high
French government signals rigorous budget negotiations as borrowing costs climb, ruling out tax increases while targeting deficit reduction.
The French government has signaled that upcoming parliamentary budget negotiations will demand significant discipline, as rising borrowing costs put pressure on public finances. Government spokesperson Maud Bregeon said on Monday that the situation "will clearly require a lot of rigour," while reaffirming that the administration has no plans to raise taxes.
Bregeon's remarks come as yields on French 10-year government bonds touched their highest level since 2008, surpassing 4.13% last week. The spike in borrowing costs adds urgency to the government's efforts to reduce the deficit without burdening consumers.
Finance Minister Roland Lescure separately stated that the government would work to keep the budget deficit as close to 5% as possible. The European Commission projects France's 2026 deficit at 5.1%, which would exceed the EU's 3% ceiling for member states.
The budget debate is expected to be contentious, with the government seeking to balance fiscal consolidation against the political backdrop of a 2027 presidential election, where polls suggest the far right could gain ground.