France budget deficit narrows in May

France’s government budget deficit narrowed to EUR 94 billion in May 2025 from EUR 113.5 billion in the corresponding period of the previous year, reflecting improved fiscal discipline and stronger economic performance.

The decline in the deficit was primarily driven by a solid increase in revenues and a modest contraction in public spending, indicating progress in efforts to rebalance public finances following years of pandemic-related stimulus.

Total revenues rose by 8.9% year-on-year to EUR 141.0 billion, supported by higher tax receipts, particularly from income tax, corporate tax, and VAT, as economic activity remained resilient. Improved labor market conditions and business profitability also contributed to the boost in tax inflows, underscoring the broader recovery of the French economy.

At the same time, government expenditures declined 3.3% to EUR 214.5 billion, reflecting tighter control over current spending and a reduction in pandemic-related support measures. Cuts in healthcare-related outlays and subsidies, along with a slowdown in some investment programs, contributed to the overall decline. However, key areas such as education, defense, and infrastructure remained funded at stable levels, highlighting the government’s strategy of selective fiscal consolidation.

Meanwhile, the Treasury special accounts, which track the balance of inflows and outflows for targeted programs such as receipts from local government and EU funding mechanisms, recorded a shortfall of EUR 20.5 billion, slightly narrower than the EUR 21.3 billion gap seen a year earlier. The improvement reflects better coordination with regional authorities and more efficient disbursement of earmarked funds.

Overall, the latest budget figures suggest that France is gradually regaining fiscal space while maintaining support for growth-critical sectors. However, the government remains under pressure to further reduce the deficit in line with EU fiscal rules, especially as discussions around reforms to pension systems and public spending intensify ahead of the next budget cycle.