Barnier Unveils Austerity Measures Amidst Political Turmoil in France

Prime Minister Michel Barnier announced steep spending cuts and tax hikes aimed at France's largest companies and wealthiest individuals to address a significant budget deficit. Despite a divided parliament and internal government conflicts, Barnier emphasized that these measures are essential for maintaining the country's reputation within the EU and financial markets.

Prime Minister Michel Barnier announced sweeping spending cuts and significant tax hikes targeting France's largest companies and wealthiest individuals on Tuesday, declaring it essential to mitigate a substantial budget deficit. Barnier, who took office last month, faces the daunting task of addressing a major financial shortfall amidst political fragmentation and infighting in his minority government.

France's stature with its European Union (EU) counterparts and financial markets is in jeopardy as borrowing costs escalate. 'The real sword of Damocles hanging over us is our colossal financial debt,' Barnier stated, as he laid out the government's policy framework, despite interruptions from the hard-left France Unbowed faction.

The prime minister underlined that the deficit was undermining France's strength in Europe and stated that the tax increases would be temporary and focused, though he did not provide specifics. Barnier committed to reducing the deficit to 5% of economic output by 2025, with a further goal of achieving the EU's 3% deficit benchmark by 2029, delayed from the initial target of 2027.

(With inputs from agencies.)