PARIS, March 27 (Reuters) - France reduced its public sector budget deficit more than expected last year as economic growth outpaced forecasts, official data showed on Friday. The statistics agency
France rules out broad energy aid despite lower deficit
Government Response to Energy Price Pressures and Fiscal Situation
By Leigh Thomas and Alessandro Parodi
PARIS, March 27 (Reuters) - French Prime Minister Sebastien Lecornu ruled out on Friday using any fiscal leeway from a better-than-expected budget deficit to provide broad financial support to shield businesses or consumers from rising energy prices.
Lecornu's minority government is under pressure from opposition parties to roll out fuel tax cuts and other costly measures to cushion the impact of higher oil and gas prices triggered by the war with Iran.
France's statistics agency INSEE said earlier that the 2025 public accounts showed a fiscal shortfall of 5.1% of economic output, down from 5.8% in 2024 and better than the government's last estimate of 5.4%.
"I've seen here and there that some people are saying there's a windfall. There is no windfall when you're running a 5.1% deficit," Lecornu told a meeting at the finance ministry.
Targeted and Temporary Support Measures
TARGETED AND TEMPORARY SUPPORT
Focus on Sectors Most in Need
Lecornu said any support measures had to target sectors most in need and be renewed on a monthly basis, marking a sharp contrast with sweeping energy price caps that badly strained public finances after Russia's 2022 invasion of Ukraine.
Offsetting Costs with Spending Cuts
Budget Minister David Amiel said after the meeting that the cost of existing support measures – which so far have focused on farmers, transport firms and the fishing industry – would be fully offset by spending cuts elsewhere.
Details of Sectoral Aid
The French government said its aid measures included 50 million euros ($57.6 million) of aid for the transport sector, which would equate to a 20 euro cents handout for small transport firms.
It also announced 14 million euros of aid for the farming sector and five million for the French fishing industry.
Fiscal Restraint and Economic Outlook
FISCAL RESTRAINT
Trends in Public Spending and Revenue
INSEE said public sector spending grew by 2.5%, slowing from 4% in 2024 and eased by lower inflation. Revenue growth accelerated to 3.9% from 3.2%, as a result of tax increases.
Deficit Reduction Targets
The government aims to cut the budget deficit this year to 5.0% as part of a broader plan to bring it back into line with the European Union’s 3% ceiling by 2029.
Public Debt Levels
INSEE also said that France's public debt stood at 115.6% of GDP in 2025, compared to 112.6% in 2024 and the government's expectation of 115.9% in 2025.
($1 = 0.8687 euros)
(Reporting by Alessandro Parodi and Leigh Thomas, additional reporting by Inti Landauro, Editing by Shri Navaratnam, Aidan Lewis and Louise Heavens)
