France's Fiscal Challenge: Balancing Spending Cuts and Tax Increases

France's new finance ministers plan to implement spending cuts first and then tax increases to address a growing fiscal shortfall. Prime Minister Michel Barnier must finalize the 2025 budget soon, with both finance and budget ministers under pressure to find billions in cuts and tax hikes as public confidence and investor concerns shift.

France's new finance and budget ministers announced on Wednesday that their budget strategy will prioritize spending cuts before considering tax increases. This move comes as the new administration grapples with the need to address a worsening fiscal deficit.

Prime Minister Michel Barnier is under pressure to finalize the 2025 budget and present it to lawmakers by mid-October. Newly appointed Finance Minister Antoine Armand and Budget Minister Laurent Saint-Martin acknowledged the challenge of finding billions of euros in spending cuts and tax hikes to close a larger-than-expected deficit.

The ministers emphasized the importance of sharing the burden, with Armand indicating that public spending would be the first target for reduction. He noted that the deficit might exceed 6% of GDP, well above the previous government's estimate of 5.1%. Both ministers are expected to detail their approach further in the coming weeks as they aim to deliver the budget by October 9.

(With inputs from agencies.)