Box A: France's Austerity Package: Assessing the Macroeconomic Impacts

Ahmet Kaya () and Patricia Sanchez Juanino ()

National Institute Global Economic Outlook, 2025, issue 17, 24-31

Abstract: France suffered a major political crisis in late 2024, culminating in the collapse of Prime Minister Michael Barnier's minority government on December 4. The political upheaval was triggered by Barnier's 2025 budget proposal, which aimed to cut spending by around €40 billion and raise revenues by about €20 billion. The austerity proposal faced strong opposition from both right- and left-wing parties, leading Barnier to bypass Parliamentary approval. This decision ultimately resulted in the opposition ousting the government with a no-confidence vote. This Box evaluates the potential macroeconomic impacts of France's proposed budgetary measures. It begins with a brief background on France's fiscal position and summarise the key measures in France's 2025 budget. It then analyses the macroeconomic and budgetary impacts using the National Institute’s Global Macroeconometric Model, NiGEM.

Date: 2025
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