France warns 2026 deficit target may be missed as growth slows

France’s finance minister warned on July 7 that the government may miss its 2026 deficit target after trimming the growth forecast to 0.7% from 0.9% and acknowledging that a weak start to the year and the impact of the Iran war are squeezing the public finances. Roland Lescure said the goal of bringing the deficit to 5% of gross domestic product was now difficult to achieve, even as the government still aimed to get as close as possible.

Budget Minister David Amiel added that another €3 billion in spending cuts or freezes would be needed to cover unplanned expenditure, on top of €6 billion in emergency savings already put in place. The finance ministry also sees a possible €2 billion overshoot in local government spending, which would widen the gap further. The adjustment comes as slower growth threatens tax receipts and Paris is being forced to support sectors hit by higher energy prices linked to the conflict.

France is already under an EU Excessive Deficit Procedure, leaving Paris under formal fiscal surveillance while it tries to rein in borrowing. The European Commission’s June 2026 forecast said France’s deficit would stay at 5.1% of GDP in 2026 before rising to 5.7% in 2027, while public debt is projected to climb to about 120% of GDP by 2027 from 115.6% in 2025. Insee said the 2025 general government deficit was €152.5 billion, equal to 5.1% of GDP, down from 5.8% in 2024, and that public debt stood at 115.6% of GDP.

The numbers highlight how much tighter the fiscal squeeze has become for Emmanuel Macron’s government. France’s debt already stands at about €3.5 trillion, and the 2027 budget is being prepared under the shadow of next year’s presidential election, when major spending cuts and structural reforms become harder to sell politically. Lescure said “the second half of the year will be crucial,” a warning that the government’s room to maneuver is shrinking just as it is trying to preserve market confidence and keep borrowing under control.

The pressure is not limited to this year’s budget arithmetic. France’s 2026 savings plan had already been set at €43.8 billion, so the new €3 billion warning adds another layer of restraint to a consolidation effort that is colliding with weaker growth, higher energy costs and an economy still struggling to build momentum.