France to Set Out Plan to Narrow Budget Deficit

Caroline, what are we expecting to see then in these proposals? A recovery budget with €54,000,000,000 of effort. That's, what, the prime minister, Sebastian O'Connor, is targeting for next year in order to bring the deficit back to a 5% target. Remember, the deficit has been sliding over to 5.4% for this year, so much higher than the target. Some of the measures we already know that are out there in the French press. These exceptional tax, remember, on these big multinational companies, well, that's not so exceptional anymore. It was already extended last year. It will probably be extended again for next year even though it might be smaller and bring only €5,000,000,000 compared to nearly €8,000,000,000 last year. Then pensioners, the elder category of the population, that's a very risky bet. They are targeted in this next budget with two proposals. One is freezing the highest pensions before inflation. So just keeping the lowest pensions with the inflation, which is, as you remember, at 3.4%. That's the latest reading. And another proposal is to remove these tax benefits for expenses that some pensioners are still benefiting from. So a lot of controversial measures are there. There's also gonna be some controversial measures about social security. The social security budget target is to basically cut the deficit in half for next year. And then, of course, some new taxes, for example, on highways, and airports. So, we'll see exactly, how the other parties in parliament react. We're gonna have this budget presented in a cabinet meeting later this morning. Of course, the international context has not helped. We saw the French government lowering the growth target for this year to just 0.5%. And as we were mentioning with of your couple of guests earlier, the spread between France and Germany has actually reached a new record yesterday, more than a 120 basis points on the ten year. If you talk to economists, the problem is that they have a hard time seeing when this could stop, where we could actually see something to break the circuit. And, Caroline, of course, we've seen in recent years how difficult getting budgets passed by the parliament can be. Two prime ministers have been failed by these debates in the past. And this time around, we have the added complexity of a presidential election next year. How does the politics feed into this debate? Exactly, Stephen. We're less than seven months away from the French presidential elections. And as you were, mentioning, remember, Michel Barnier two years ago, Francois Bercet, last year, both these prime ministers, governments had to collapse over the budget. Now this time may be slightly different because remember the national rally is still the kingmaker in the French parliament that is fragmented into three blocks. And Marine Le Pen, the national rally candidate for next year's election, has actually suggested she may perhaps refrain from toppling this government this time around because what she thinks is that if she is elected in May next year, it might be easier for her to amend the budget to change what is already out there rather than starting a new budget from scratch. Because otherwise, of course, if there is no budget by the end of December, France will have to rely on the so called special law in order to keep collecting taxes and keep the government running. And, of course, this special law cannot continue forever. The past two years, it was approximately until February, but the elections are not until May of next year. So, Marine Le Pen is saying that perhaps she wants this budget to pass even if it's not perfect, even if she doesn't like it, so she can have an easier time to change it if she's elected. And that's also the point from the prime minister, Sebastian Lacqua Nyung, saying it's better to have a budget that is imperfect rather than no budget at all. Of course, Lacqua Nyung's popularity has been going down 24% in his latest this week before the strikes that we saw from public sermons on Tuesday, and Macron's popularity is at the lowest ever, just 18%. And at the same time, this double ticket for the presidential elections, Bordela and Le Pen still has... Is still far ahead in the polls with 35% of support among the French.