French PM Seeks Confidence Vote for Controversial €44 Billion Austerity Plan

French Prime Minister François Bayrou announced on August 25 that he will seek a vote of confidence in the National Assembly on September 8, aiming to secure parliamentary support for his government's proposed €44 billion austerity plan. This plan is designed to address France's escalating public deficit, which reached 5.8% of GDP in 2024.

The austerity measures include eliminating two public holidays—Easter Monday and May 8 (Victory in Europe Day)—freezing welfare spending, and introducing a "solidarity contribution" targeting the wealthy. These steps are intended to reduce the deficit to 4.6% by 2026 and to 2.8% by 2029, aligning with the European Union's 3% target.

Bayrou's centrist alliance lacks a parliamentary majority, making the outcome of the confidence vote uncertain. Opposition parties from both the far-right and far-left have expressed strong resistance to the austerity plan. Marine Le Pen of the National Rally condemned the elimination of public holidays as "a direct attack on our history, our roots, and the working people of France."

The announcement has already impacted financial markets, with France's 10-year bond yield rising by up to 9 basis points to 3.508%, the highest level since March.

This situation echoes previous instances where French governments faced challenges in implementing austerity measures. In late 2024, Prime Minister Michel Barnier's government collapsed after failing to secure support for a budget proposal that included significant spending cuts and tax increases.

The proposed measures have sparked public discontent, with nationwide protests planned for September 10, reminiscent of the 2018 "Yellow Vest" demonstrations. Leftist parties and unions have called for these protests, highlighting concerns over the impact of austerity on workers and the middle class.

The confidence vote on September 8 will be a critical juncture for Bayrou's government and France's economic direction. The outcome will influence France's ability to address its fiscal challenges and maintain political stability.