Bayrou's Budget Speech: Some Serious Proposals and Others Discarded, What He Will Announce on July 15

As he is due to present the broad outlines of the 2026 budget in a speech on July 15, François Bayrou clarified his position on taxes. He also reiterated his objective: to achieve €40 billion in savings.

Raising €40 billion and reducing the deficit to 4.6% by 2026. François Bayrou reiterated his government's budgetary objectives a few days before the presentation of his public finance recovery plan and budgetary guidelines scheduled for Tuesday, July 15, at 4 p.m. "The government will outline the constraints, the necessary efforts, and the decisions to be made to escape this death trap" that is the deficit, currently estimated at 5.8% of gross domestic product, the Prime Minister declared on LCI on Thursday, July 10.

François Bayrou refused to specify the avenues being considered and gave no hints about the announcements expected next Tuesday. "We will have to make efforts," he simply replied. Even on possible tax increases, a serious avenue for recovering the €40 billion in savings, the head of government did not provide details. However, he did dismiss the idea of ​​a general increase in favor of "specific efforts" "here and there." "I want everyone to participate" in the savings effort, the Prime Minister reiterated, specifying that he did not want "some categories to be targeted and others to be untargeted."

"I don't believe that taxes are the way to solve problems," insisted François Bayrou. While he is "not primarily" considering tax increases, he promised in early July to "abandon credits during the year" and "turn off the taps when necessary."

The Prime Minister is banking on a four-year plan "to return (...) to a certain balance in public finances" so that "we reach the point where the debt no longer increases (...) we can get there by 2029," he assured. On Tuesday, July 2, the Court of Auditors published a report calling for "regaining control" of public finances. "Postponing efforts is no longer possible, while the public debt burden has already doubled between 2020 and 2024," the institution said.

Tax increases and "austerity cure"

Monday, July 7, the Nicolas Dufourcq, CEO of the public investment bank Bpifrance, believes that with François Bayrou's upcoming announcements, " France will experience its first austerity cure for a few years ." "We spent our time making (the French) believe that they were in crisis," but "we have never been in budgetary austerity since 1983," he said on BFM Business . For his part, the most unpopular Prime Minister in the history of the Fifth Republic is unlikely to enter the hearts of the French, and particularly, of taxpayers.

On the agenda: a dose of tax increases for retirees, mixed with a few drops of tougher taxation against the wealthiest and (perhaps) businesses, as well as a hint of reduced tax benefits for individuals... A bitter-tasting recipe, difficult to swallow, but which should indeed be presented and defended. In detail: the tax credit on home services should be reduced, the end of the 10% tax allowance for retirees enacted, a smaller benefit for businesses on their donations formalized, a new tax to be paid by the ultra-rich created and a tax on parcels arriving in France for less than 150 euros introduced.

That's not all, far from it. The Prime Minister could discuss a "complete reorganization of the state, locally, around the prefects. Because the current system, with its fragmentation of institutions, administrations, and agencies independent of each other, is very expensive and inefficient. No one can find their way around it," he confided to Le Parisien . The goal remains the same: to make maximum savings. The 2004 decree, which makes the prefect the representative of the state in the departments and sets out his scope of action, should be revised.

"We're going to make sure there's someone in charge, someone who's in charge. We'll have to pay even more attention to the use of public money, so that it's used wisely," continues the Béarn native. He's expected to announce mergers and/or eliminations of certain public operators, following the proliferation of regional offices and state agencies in recent years. This is a trend that François Bayrou intends to halt. He is due to outline the first contours of his reform around the organization of the State on Tuesday, July 8 in Chartres (Eure-et-Loir).

A blank year? The idea that doesn't meet with unanimous approval

Typically, retirement pensions and certain social benefits are revalued annually based on inflation. The government, for its part, is considering announcing a deficit reduction plan. This would mean maintaining certain social benefits, such as family allowances and minimum social benefits, at the 2025 level. The goal is to curb budgetary overruns. In practice, this could amount to a one-year freeze on tax scales, retirement pensions, the index point for civil servants, and grants allocated to local authorities.

To a lesser extent, François Bayrou could announce a partial de-indexation. A blank year is "an option on the table," Foreign Trade Minister Laurent Saint-Martin acknowledged on France Inter this Sunday, even though he considers this strategy a "one-off (...) it doesn't provide a lasting solution to the balance of our finances," he conceded.

"Today, the decision on the principle has not yet been made," an office of the Ministry of the Economy is trying to temper. The "range" of savings "will really depend on the chosen scope," if the Prime Minister were to validate this blank year option, reports Sud Ouest . For her part, the Minister of Public Accounts, Amélie de Montchalin, had said she was in favor of " a pause " on certain public spending, without " undifferentiated " tax increases, thus assuming a different position from that tempting the Prime Minister: the blank year.

Beware, the Béarnais' decisions will be closely scrutinized within the relative presidential majority, where the pressure is already being felt. For the leader of the Macronist deputies, Gabriel Attal, there is no question of "labor costs" increasing, he assured Les Échos at the end of June. Laurent Wauquiez, president of the LR group in the National Assembly, is not to be outdone. According to him, the blank year running through François Bayrou's mind is merely a "modest term for a fiscal red year," he declared from the lower house of Parliament last Wednesday during a press briefing. The latter assures that he will "put pressure on François Bayrou" to avoid any tax increases. According to an estimate by the Institute of Public Policy (IPP), by the end of June, a blank year would generate a budgetary gain of €5.7 billion, far from the €40 billion total hoped for.