France can no longer rely on raising taxes to fix its strained public finances and must shift decisively to cutting government spending, the country’s national audit office said on Thursday, according to a report by the Cour des Comptes.
The audit office warned that the French government’s budget plans for 2026 which target a public deficit of 5 percent of gross domestic product (GDP) are “highly uncertain” after lawmakers dropped several major savings measures in the social security budget. France already carries the highest tax burden in the euro zone, and further significant tax increases could undermine competitiveness and cost jobs, the watchdog said.
The Cour said the government’s 2026 budget relies heavily on roughly 12 billion euros in additional tax revenue, particularly from extending a corporate profit surtax on large companies. But many other proposed revenue-raising measures were either weakened or abandoned, and the watchdog cautioned that the remaining items could perform below expectations if inflation turns out lower than forecast or if companies adjust to blunt their impact.
“With taxation already at a high level, further substantial tax hikes would risk damaging competitiveness and hitting employment, making spending cuts unavoidable,” the audit office said in its report on the state of France’s public finances at the start of the year.
On the spending side, the watchdog noted that although government outlays are expected to grow by only about 0.3 percent in 2026 after inflation an unusually slow pace there are significant risks of budget overruns. Parliament scrapped planned savings measures such as increased medical co-payments and a freeze on pension increases, which the Cour said could widen the gap between planned and actual spending.
Even if the 2026 deficit target is met, France’s public debt would still climb to about 118.6 percent of GDP, leaving the country more vulnerable to rising borrowing costs and raising the possibility that more severe austerity would be needed later in the decade, the audit office said.
The warning from the Cour comes as France continues to grapple with high borrowing costs, modest economic growth and political debate over how to rein in spending without stifling recovery. Previous audit reports have also highlighted long-term fiscal pressures, such as a steep rise in pension deficits over the next two decades, reinforcing concerns about France’s ability to finance its welfare state without structural reforms.
Analysts say the combination of limited scope for further tax increases and resistance to spending cuts could force French policymakers to make difficult choices to restore confidence among investors and comply with European Union fiscal rules.
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