French draft budget law: no surprises, but a very challenging budget path

The government unveiled on 10 October the details of its Draft Budget Law for 2025 with main announcements widely in line with the elements already released in the press. The government aims to deliver an effort of €60.6 bn (~2 pp of GDP) in 2025 to reduce the public deficit to 5 .0 %, after 6.1% expected in 2024. The public deficit would have reached 7% in 2025 if nothing was done to correct it according to the government. The government cocktail includes a €41.3bn effort (~2/3) in spending cuts and €19.3bn (~1/3) in tax increases . We tend to disagree with this split and consider more a 50/50 effort between spending cut and tax increases. GDP growth and inflation government forecast could be a bit too optimistic but are not unrealistic. T he €60bn effort expected in 2025 would be unprecedented and remains very challenging as a lot of measures lack details, especially on the spending side , and in a context of a hung Parliament. What's next? the budget will be debated in Parliament (21-25/10 for the first part of the budget with a first key vote on 29/10). Debates regarding the social security budget law will begin on 28/10 with a vote on 5/11. The final vote of the budget should be around 21/12.