French budget likely to be a "nightmare," government spokesperson says - Reuters

Investing.com - The need to slash France's deficit and allow for increased military spending will likely make balancing the country's budget for the 2026 calendar year challenging, Reuters reported.

Citing statements made to Public Senat TV, Reuters reported that French government spokeswoman Sophie Primas said the 2026 budget "is going to be a nightmare given the extent of our financial difficulties," describing the process of passing the financing package as "very difficult."

Francois Bayrou, France's centrist Prime Minister, has called for a drawdown in the public sector budget deficit to 3% of economic output -- the European Union's ceiling for the figure -- by 2029. This year, the shortfall stands at 5.4%, one of the largest in the EU.

But French Finance Minister Eric Lombard has said that work is now underway to try to lift the country's defense spending, echoing recent calls around Europe to raise its military expenditures in the face of a perceived threat from Russia and indications that the region may no longer be able to rely on the U.S. to provide a security backstop.

Earlier this month, German lawmakers backed a measure to relax longstanding borrowing limitations, paving the way for defense and infrastructure spending plans proposed by Chancellor-in-waiting Friedrich Merz that are worth hundreds of billions of euros.

Still, Lombard has said the defense spending should neither add to France's debt obligations nor dent its popular -- albeit costly -- welfare system.

(Reuters contributed reporting.)