French government mulls budget concessions to avoid collapse

French Finance Minister Antoine Armand expressed his willingness to make concessions on the 2025 budget bill in order to prevent opposition parties from toppling the government.

“The question is whether it’s better to have a budget that is not exactly the one we want or no budget,” Armand said. “Obviously it’s better to work on a budget that is not exactly the same, otherwise we leap into the unknown,” News.Az reports, citing foreign media.

Prime Minister Michel Barnier’s administration risks being toppled in the coming weeks as opposition lawmakers threaten to unite in no-confidence votes over its fiscal plans. The left has pledged to table such a motion as soon as next week, leaving Barnier’s fate in the hands of Marine Le Pen’s National Rally party, which would have the casting votes.

The prospect has pushed investors to sell French assets, driving up the country’s borrowing costs compared with European peers. The rate on 10-year French notes matched Greece’s for the first time on record on Thursday.

“We are faced with an immense responsibility today to provide a budget for the country,” Armand said. “There is the other path that leads to the unknown, to downgrade and the dislocation of the country.”

Following Armand’s comments, the French bond yield over Germany narrowed as much as three basis points to 83, though it was back at 85 again by 11 a.m. Paris time. The spread widened to as much as 90 basis points on Wednesday as investors priced in a higher chance of parliament voting down the budget.

While Armand didn’t specify the degree of concessions the government is willing to make, he confirmed that Barnier is ready to change plans to raise taxes on electricity that Le Pen has slammed. She has also demanded a modification of measures to curb pensions expenditure and reduce state reimbursement of medicines.

News.Az