France's Fiscal Health: Deficit Shows Surprising Improvement

France reduced its public deficit more than anticipated in 2025, thanks to stronger economic growth and tax hikes. The fiscal shortfall dropped to 5.1% from 5.8% in 2024. The government aims to cut the deficit further, aligning with the EU's 3% target by 2029 despite uncertainties.

France has managed to reduce its public sector budget deficit more than expected, according to official data released on Friday. The country's fiscal shortfall for 2025 stood at 5.1% of economic output, down from 5.8% in the previous year, outperforming the government's estimate of 5.4%.

This reduction was credited to stronger economic growth and tax hikes, with public sector revenue growth accelerating from 3.2% to 3.9% and expenditures rising at a slower pace. Finance Minister David Amiel expressed optimism about further reducing the deficit in 2026, despite global uncertainties.

Plans are underway to cut the deficit to 5.0% this year, with the aim of aligning with the European Union's ceiling of 3% by 2029. Meanwhile, France's public debt was reported at 115.6% of GDP in 2025, slightly below the government's expectations.

(With inputs from agencies.)