France’s financial situation, already under the watchful eyes of ratings agencies, financial markets, and the European Union, is expected to face further challenges regardless of the results of the upcoming snap parliamentary election, which begins with the first round of voting on Sunday.
All major political parties have proposed new spending initiatives, but their strategies for funding these plans remain vague and often lack feasibility.
Polls suggest that the far-right National Rally (RN) is likely to lead, followed by the left-wing New Popular Front alliance, with President Emmanuel Macron’s Together coalition in third place.
The current administration had pledged to reduce the budget deficit from 5.5% of the Gross Domestic Product (GDP) last year to the EU’s target of 3% by 2027. However, this goal might be out of reach following the election, which will conclude with a second round on July 7.
Far-Right National Rally (RN) Proposals
If the RN forms a government, it plans to cut the value-added tax (VAT) on energy starting in July, a measure estimated to cost 7 billion euros for the remainder of this year and 12 billion euros annually. The RN claims this reduction will be funded by securing a 2-billion-euro rebate on France’s EU budget contribution, although the EU’s budget for 2021-2027 has already been finalized.
The RN also aims to increase revenue by imposing a levy on exceptional profits from power producers and replacing the tonnage tax on shipowners with standard corporate tax. However, this sector’s recent high profits are likely to decline.
Additionally, the RN intends to reverse a planned reduction in unemployment benefits scheduled for July, a move that the current government estimates would cost 4 billion euros.
Looking further ahead, the RN proposes indexing pensions to inflation, lowering the retirement age to 60 for those who started working at 20 or younger, exempting some workers under 30 from income tax, and raising salaries for teachers and nurses. The party also wants to proceed with cuts in local business taxes, which the current government had to suspend due to affordability concerns.
