France plans €54 billion savings drive as protests grow

By Leigh Thomas and Alexandre Dimou

PARIS, Sept 17 (Reuters) - France's government plans to include a €54 billion savings drive in its 2027 budget to stop the fiscal deficit spiralling out of control, Prime Minister Sebastien Lecornu said on Thursday as he faced growing protests and pressure over high fuel prices.

"This is a major turnaround; these savings will significantly rein in the spending machine, whose costs continue to rise relentlessly every year," Lecornu told Le Figaro newspaper.

With a presidential election looming next year, Lecornu's government is racing to finalise a deficit-taming 2027 budget as bond market pressure mounts and voters grow increasingly restless over the rising cost of living.

French fishermen blocked access to ports in southern France on Thursday over high energy prices, the latest in a wave of protests. Workers from the power sector to the police were striking on Tuesday over issues ranging from pay to fuel.

The energy price crisis complicates the government's task of finalising its 2027 budget, which it is due to present at the end of the month to France's deeply divided parliament amid a bond market selloff that has pushed French borrowing rates to their highest level since 2008.

Lecornu said that the budget squeeze was necessary to rein in social and local government spending as well as rising borrowing costs. He promised not to raise taxes.

"All in all, if this budget did not include any cost-saving measures, the 2027 deficit would exceed 6.5% of GDP," Lecornu said.

Ongoing austerity measures meant the 2026 deficit should remain well below 5.5% of GDP. The deficit target in the draft budget was 5% of GDP for 2027, he said.

BUDGET BATTLES

Finance Minister Roland Lescure acknowledged last Friday that fallout from the Middle East crisis meant the government would miss its fiscal deficit target of 5% of GDP this year and is struggling to come up with spending cuts that opposition parties can stomach.

Ministers were consulting with most parties on Thursday and Friday as the government seeks to craft a budget bill that has a chance of getting passed in parliament, where Lecornu's two predecessors were toppled over previous budgets.

However, Socialist lawmakers have ruled out giving their support as they did for the 2026 budget, potentially leaving the fate of the 2027 budget in the hands of the RN, whose leader Marine Le Pen is the frontrunner in the polls for next year's April-to-May two-round presidential election.

Le Pen said on Wednesday that the RN, the biggest party in the lower house but without a majority, would vote against the budget if it included mooted plans to not raise pensions in line with inflation to save money.

"In any case, there is a very strong likelihood that I will vote against the budget because I disagree with all of the policies that the budget actually reflects," she said on LCI television.

However, she stopped short of ruling out abstaining, saying she would examine the bill first. An imperfect budget was better than none at all, she added.

"There will be no Article 49.3, no executive orders, and in the end, there will be a vote!" Lecornu said.

"The government will do everything it can to find a compromise. France needs political stability, but now it is also necessary to guarantee financial stability," he added.

UNDER PRESSURE

Junior Fisheries Minister Catherine Chabaud said fishermen had agreed after six hours of talks on Thursday to lift blockades at several Mediterranean ports, ending three days of protests over fuel costs.

"Fishermen are being strangled, suffocated," Gérard Corrodano, who represents fishermen in La Ciotat told Reuters. "Fishermen are the most endangered 'species' in the Mediterranean."

Lecornu on Wednesday extended emergency fuel subsidies until the end of the year for the agriculture, fishing and construction sectors.

(Reporting by Leigh Thomas, additional reporting by Elizabeth Pineau, Dominique Vidalom, Marc Leras and Gabriel Stargardter; Editing by Richard Lough and Andrew Heavens)