(Bloomberg) -- The new French government gathered for the first time Friday amid efforts to overcome the budget quagmire that toppled the previous administration.
“We’re trying to get out of red lines and postures, that’s exactly what we’re asking all political groups,” government spokeswoman Sophie Primas told reporters in Paris following the cabinet meeting.
“The French people demand results,” she said, adding that a new target to narrow the country’s ballooning deficit this year will be set after ongoing talks with political parties.
Recently appointed Prime Minister Francois Bayrou, who presented his new cabinet early last week, is expected to lay out his policy agenda to parliament on Jan. 14 and has pledged to have a 2025 budget by mid-February.
His predecessor, Michel Barnier, was toppled in early December after the left and far-right joined forces in a no-confidence vote to block his fiscal plans. The opposition argued the proposals were too painful for households.
To replace the former European Union Brexit negotiator, President Emmanuel Macron opted for Bayrou, a veteran centrist with a track record of striking alliances and forging compromises with both Socialists and conservatives.
Bayrou recruited a new cabinet filled with heavyweights and veteran figures to attempt to push through the urgent budget tightening that led to his predecessor’s eviction. The premier brought two former prime ministers back to government and tapped Eric Lombard, a seasoned investment professional with ties to the left, to run the Finance Ministry.
Lombard and Budget Minister Amelie de Montchalin are holding consultations with all political parties and parliamentary groups through mid-January to discuss propositions and recommendations that would lead to potential budget amendments.
The new finance chief said in an interview with La Tribune Dimanche newspaper published on Sunday that the deficit should come down to around 5% this year from over 6% in 2024 in a way that protects growth.
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Bayrou may yet struggle to avoid the same fate as Barnier, who ended up being the shortest-serving prime minister of France’s Fifth Republic, established in 1958.
The 73-year-old premier must deal with the financial and political constraints that sank the previous administration. And until there are fresh legislative elections — which can’t happen before July at the earliest — it will be a challenge to get laws through a fractious parliament in which Macron’s party lacks a majority.
A decree was published Tuesday to roll over last year’s spending limits to this year until such time as there is a new budget. A circular sent to ministers said expenses must be limited to those that are strictly necessary, according to Agence France-Presse.
France has been in political turmoil since June, when Macron dissolved the National Assembly and called early elections. The ballot returned a lower house split roughly among three divided blocs: the leftist New Popular Front alliance, Marine Le Pen’s far-right National Rally and a smaller group of centrists that support the president.
France’s political and budget difficulties have sparked a sell-off in the country’s debt in recent months, driving up the country’s borrowing costs compared with European peers.
Last month, Moody’s Ratings cut France’s credit grade in an unscheduled change, warning that public finances in the euro area’s second-biggest economy will be weakened over the coming years and that there is a “low probability” the new government will be able to sustainably reduce the size of fiscal deficits beyond 2025.
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