France’s new premier vows to cut deficit

France’s new Prime Minister François Bayrou pledged to reduce the country’s budget deficit to near 5 per cent of GDP, down from the current 6.1 per cent, as he unveiled his new cabinet on Monday.

The plan, set to be outlined in parliament on January 14, faces strong opposition from rival political blocs, raising the risk of another no-confidence vote.

Bayrou’s centrist government must navigate a fragmented National Assembly, where opposition forces from the far-right National Rally and the leftist Socialist Party have already criticised the new administration. Political tensions have persisted since President Emmanuel Macron dissolved the assembly in June, leading to early elections that created a deeply divided parliament.

France’s budget struggles have increased borrowing costs, with the spread between French and German 10-year bond yields reaching 81 basis points on Monday, the highest in weeks. Despite the challenges, Bayrou emphasised the importance of supporting businesses, calling them “the national treasure” for job creation and economic growth.

Attribution: Bloomberg

Subediting: M. S. Salama