France's New Budget Ministers Tackle Fiscal Crisis with Spending Cuts and Tax Hikes

France's new finance and budget ministers are focusing on cuts and tax hikes to address a growing fiscal deficit. Prime Minister Michel Barnier is set to present a 2025 budget amid political challenges and weak economic conditions. Consumer confidence has improved despite borrowing cost concerns.

France's newly appointed finance and budget ministers have announced a strategy to focus primarily on spending cuts followed by tax increases to address the country's spiralling fiscal deficit. Prime Minister Michel Barnier must finalise the 2025 budget in coming days and submit it to lawmakers by mid-October.

Finance Minister Antoine Armand and Budget Minister Laurent Saint-Martin face the tough task of identifying billions of euros in spending cuts and tax hikes to offset a larger-than-expected deficit. The government lacks a parliamentary majority, complicating the process as balance of power rests with left-wing and far-right lawmakers.

Armand, in his first appearance before the parliament's finance committee, emphasised the need for public spending efforts. Saint-Martin noted the deficit might exceed 6% of economic output, worse than previously estimated. The Bank of France Governor has urged significant spending cuts. Despite improved consumer confidence, investor concerns contribute to rising borrowing costs.

(With inputs from agencies.)