France's New Prime Minister Reverses Austerity Plans in Bid to Win Over Socialists

Strategic Insights -

Sebastien Lecornu's appointment as France's new prime minister has brought a sense of urgency to the country's debt crisis, with the prime minister vowing to find "creative ways" to work with rivals to pass a debt-slimming budget. Despite his efforts, polls suggest that the French are still undecided on whether he is the right man for the job. In an interview, Lecornu stated that he understands citizens' concerns about work and pay, and promised to drop the suppression of holidays as part of his plan to reduce the country's debt mountain. However, critics argue that his proposals do not address the root causes of the debt crisis and that he should focus on getting to the bottom of the issue.

Key Takeaways:

  • Lecornu has overturned a plan by his predecessor, Francois Bayrou, to scrap two public holidays, which was part of a proposed €44bn in spending cuts and tax rises to narrow France's 2026 deficit to 4.6 per cent of economic output from an expected 5.4 per cent this year.
  • The French government plans to reduce the country's debt mountain, which is expected to continue rising until 2027 unless urgent action is taken, as warned by the Fitch ratings agency.
  • Lecornu has proposed eliminating certain "privileges for life" for former French prime ministers, which cost the state around €1.5m per year.
  • The prime minister has also promised to launch a mission to clean up state committees, delegations, and offices.
  • Unions are set to stage a day of strike protests on September 18, which were initially called to voice opposition to the Bayrou budget.
  • Two conflicting polls on Sunday suggested the French are undecided on whether Lecornu is the right man for the job, with 16% approval ratings in one poll and 38% in another.
  • Macron's popularity has nosedived, with just 17% of respondents expressing a favourable opinion of the French president.
  • Some opposition groups, including Marine Le Pen's National Rally and Jean-Luc Mélenchon's Leftist France Unbowed, are calling for snap elections or for Macron to step down before his second term ends in 2027.

Statistics:

  • €44bn: the proposed amount in spending cuts and tax rises to narrow France's 2026 deficit to 4.6 per cent of economic output from an expected 5.4 per cent this year.
  • €1.5m: the amount cost to the state of certain "privileges for life" for former French prime ministers per year.
  • 4.6%: the target deficit-to-GDP ratio for France in 2026.
  • 5.4%: the expected deficit-to-GDP ratio for France this year.
  • 2027: the year by which France's debt mountain is expected to continue rising unless urgent action is taken.
  • 540: the number of arrests made during the "Block Everything" protests against austerity in Paris and other big cities.
  • 16%: the approval ratings for Lecornu in one poll on Sunday.
  • 38%: the approval ratings for Lecornu in another poll on Sunday.
  • 17%: the proportion of respondents expressing a favourable opinion of Macron.

Sources:

  • La Depeche newspaper
  • Ipsos-BVA barometer
  • Ifop poll
  • Fitch ratings agency