PARIS, Feb 19 - France can no longer count on new tax increases to restore fiscal balance and must pivot toward cutting public expenditure, the national audit office said in a sobering assessment of the state finances. The Cour des Comptes warned that the government’s target of a 5% of GDP deficit in 2026 - itself relaxed from an initial 4.7% goal - remains "highly uncertain" after lawmakers removed several major savings from the social security budget.
The watchdog said the 2026 budget relies heavily on about 12 billion euros of additional tax revenue, led by the near-full extension of a corporate surtax on large companies. Other measures intended to raise revenue were either abandoned or diluted during the parliamentary process, the Cour said, and it cautioned that the measures still in place could generate less than expected if inflation turns out lower than forecast or if companies adapt to reduce the impact on profits.
With France already carrying the highest tax burden in the euro zone, the audit office said that further tax increases at the scale needed to bring down the deficit would risk undermining competitiveness and hitting employment - outcomes that the watchdog said make spending cuts unavoidable.
However, the report also highlighted significant upside risks on the expenditure side. Following parliamentary decisions to drop planned measures - including higher medical co-payments and a proposed freeze on pensions - the Cour warned that spending is likely to exceed official projections.
Official estimates foresee spending growth of only 0.3% in 2026 after accounting for inflation, a slowdown the report described as unprecedented. Yet the watchdog flagged that this subdued spending trajectory is vulnerable to overruns now that several cost-saving steps have been removed.
Even if the government achieves its 2026 deficit objective, the Cour des Comptes noted that public debt would still rise to 118.6% of GDP. That elevated debt level, the report said, would leave France more exposed to increases in borrowing costs and could force more substantial fiscal tightening later in the decade.
Summary
France’s national audit office says tax hikes are effectively exhausted as a tool to reduce the deficit and that decisive spending cuts are now necessary. The 2026 deficit goal is uncertain after lawmakers scrapped savings, and key revenue measures may underperform. Even meeting the target would still push debt higher, increasing vulnerability to future borrowing costs.