France Proposes Budget Freeze for 2025

In a significant move, Gabriel Attal, France's outgoing prime minister, sent "ceiling letters" to all ministers on August 20, outlining a provisional spending cap of €492 billion for the government in 2025. This announcement comes as part of the preparatory process for the upcoming state budget, with Attal indicating that certain sectors, such as defense, culture, and sports, will receive priority funding, while labor and employment may face cuts. The letters, which hold no legal weight, raise questions about their purpose—whether they serve as a foundation for the incoming government or merely a technical measure. The issuance of these ceiling letters traditionally marks a crucial phase in budget preparation. However, the current political climate has complicated matters. Minister for Public Accounts Thomas Cazenave had initiated discussions on the budget before the government’s dissolution, but the process was interrupted. With President Macron's delay in appointing a new prime minister, Finance Ministry officials felt compelled to continue budget preparations to avoid disrupting the fiscal process. Attal's decision to send the letters, albeit a month late and after revisions, reflects the urgency of maintaining budgetary momentum. The term "reversible budget" was used by his office, suggesting that the next government and Parliament can modify these spending caps. This situation underscores the complexities of governance during a transitional period, as the outgoing administration navigates its responsibilities while awaiting a new leadership.