France, Lecornu exempts wealth tax - New Prime Minister aims to reduce budget deficit to 4.7% by 2026
France's new Prime Minister, Sebastien Lecornu, ruled out reinstating the wealth tax and suspending the controversial pension reform as he struggles to draft the 2026 budget and form a government.
Since President Emmanuel Macron appointed him as his fifth prime minister in less than two years, amid a deep political crisis, Lecornu has spoken little about his intentions, focusing mainly on consultations with party leaders and unions. His predecessor, Francois Bayrou, was ousted by parliament over a plan for 44 billion euros in budget cuts next year.
Lecornu said he is targeting a budget deficit of around 4.7% of GDP in 2026, very close to the previous target of 4.6%, down from a forecast of 5.4% this year. He said the draft budget would take into account French citizens' demand for more fiscal fairness. However, the prime minister stressed that it would be parliament that would ultimately decide on the budget package, calling on lawmakers to find a consensus.
But that won't be easy to achieve. Macron's ruling alliance lacks a parliamentary majority and will need the support of conservatives and socialists to pass the budget. Two of the policies Lecornu ruled out, a wealth tax and a suspension of pension reform, are key demands of the Socialist Party.
In his interview with Le Parisien, Lecornu warned that if France fails to approve a budget by the end of the year, the deficit risks reaching 6% next year. However, he downplayed financial markets' concerns about France's debt.
The French prime minister ruled out the proposal of some economists, which is supported by the Socialists and foresees a 2% tax on the richest 0.01% of France in the 2026 budget, as a condition for their vote.
"There is a political and social demand for more fiscal justice. We cannot dismiss this debate easily. But is this tax the right solution? Personally, I don't believe so," he said.
Lecornu, appointed on September 9, aims to form his government by early October.
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