French PM vows to cut public spending by €54 billion to reduce deficit

France's prime minister promised Thursday that the government will reduce the country's deficit next year by cutting public spending by €54 billion ($62 billion) in 2027. But Sébastien Lecornu insisted his plans did not amount to austerity, as high fuel prices cause renewed social tensions just months before the presidential election. Read moreFrench candidates race to claim the cost-of-living issue ahead of 2027 vote In an interview with the Le Figaro business newspaper, he said the cuts will bring the public deficit down to 4.8 percent of gross domestic product excluding defence spending, and five percent including military spending. The French government initially aimed to cut the deficit from 5.1 percent of GDP last year – one of the highest in the eurozone and above the three-percent limit set for EU members. But the government acknowledged on Thursday that it will likely rise to 5.4 percent. The 2027 budget takes "an assertive stance on cutting public spending in a country that relies too heavily on it", Lecornu told Le Figaro. "It is a political risk, I am not unaware of that. But we are a long way from austerity!" the prime minister added. The jump in global oil prices above $100 per barrel has led to record petrol and diesel costs in France, prompting calls to demonstrate against the high cost of living. With a presidential election seven months away and France's economic situation worsening, the government is wary of a new wave of demonstrations like the so-called yellow vest movement that swept the country over fuel tax hikes. Pensioners let off Lecornu said retirees would only be asked to make a limited contribution to the cost-cutting effort. "No pension will be reduced," he said. "Then the debate on the pace of increases will be settled in parliament," he added. French state pensions are normally increased in line with inflation. Lecornu also excluded freezing the level of many benefits. Public sector workers will not get cost-of-living adjustments. The government will also let the income tax rate thresholds rise, bringing in more revenue from individuals. But taxes on some companies will drop as the government is set to exclude them from an additional levy on larger businesses. Worries about the French economy, which contracted in the first quarter and was stagnant in the second, have led to fresh concerns about the sustainability of France's public spending and debt. Yields on government bonds have soared to levels not seen since the global financial crisis in 2008, raising the cost of financing the government's debt, which is at 117.5 percent of its GDP, to a level last seen in World War II. (FRANCE 24 with AFP)