By Michel Rose and Leigh Thomas
PARIS, Oct 6 (Reuters) – Marine Le Pen sharply increased her plans to slash spending if she wins next year’s French presidential election, an announcement designed to establish the far right’s fiscal credentials as tensions rise in the bond market.
French borrowing costs have surged in recent days to levels not seen since the early 2000s as France has become a focus of a global bond market rout over its strained public finances and political uncertainty ahead of the April-May two-round election.
“In view of the rise in interest rates and the meagre budget proposed by (Prime Minister) Sébastien Lecornu and (President) Emmanuel Macron, I can announce right now that we are setting the necessary adjustment at €140 billion in net savings in 2032 compared with 2026,” Le Pen told journalists on Tuesday.
The €125 billion in savings she had originally planned over the course of a five-year presidency were no longer sufficient, she said. Most of the cuts would be achieved in the first three years and come from streamlining the way the government functions, Le Pen said.
The new package would bring France’s budget deficit down to an EU limit of 3% of economic output as soon as 2030, down from 5.4% this year, she said. Discussions were needed with the European Central Bank to help ease France’s borrowing costs once the country regained control of its public finances.
Under her plan France would limit its net contribution to the EU budget to €5 billion, the level it was at in the early 2000s. She said she would present plans to rein in France’s increasingly costly pension system in the coming weeks.
SPENDING CUTS
French bond yields, which were already down sharply before Le Pen’s remarks, saw a brief further dip as she spoke. She even pointed the move out on her phone to an RN official.
France’s 10-year yield was last down 11 basis points on the day at 4.75%, roughly where it was before Le Pen’s speech.
The fiscal turmoil has become a top campaign issue, and convincing financial markets to fund campaign promises will be among the first big challenges for whoever is elected.
Le Pen, who is leading in the polls for the two-round April 18-May 2 election, has sought to build budget credibility with her savings plans.
She said she wanted to enshrine fiscal restraint in the constitution with a referendum on a “golden rule” that would require the budget deficit to be reduced at least half a point annually until the national debt returns to 60% of economic output, down from 119% currently.
Le Pen has so far struggled to win over business leaders concerned about her euroscepticism and plans to reverse a contested 2023 pension reform.
BUDGET PRESSURE
With investors offloading French assets, prime minister Lecornu’s government has sought to calm market jitters by unveiling a 2027 budget that includes €43 billion of new savings.
The fate of France’s 2027 budget in France’s divided parliament rests with opposition parties, of which Le Pen’s National Rally (RN) is the biggest.
Outlining a shadow 2027 budget, party leader Jordan Bardella demanded €71.6 billion in savings measures, including €28 billion by streamlining spending and €15 billion in cuts to spending that benefits immigrants.
Bardella did not rule out backing a no-confidence motion against the government over the budget, but left the door open to a possible abstention.
($1 = 0.8925 euros)
(Reporting by Leigh Thomas, Michel Rose and Elizabeth Pineau; additional reporting by Alun John in London; Editing by Jon Boyle)
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