The Council of the European Union, in a recommendation dated 22 June 2026, has called on France to implement a series of economic, social, employment, structural and budgetary policies aimed at addressing fiscal sustainability risks and boosting growth. The recommendation, which will be formally adopted at the Council meeting on 24 June 2026, sets out specific net expenditure growth limits and fiscal targets, and urges France to permanently reduce public spending, shift the tax burden away from labour and productive capital, and preserve the impact of the 2023 pension reform despite its suspension until January 2028.
The recommendation is part of the European Semester cycle and follows the European Commission's assessment of 3 June 2026, which led to the excessive deficit procedure for France being held in abeyance. France's general government deficit stood at 5.1% of GDP in 2025 and is projected to remain at 5.1% in 2026 before rising to 5.7% in 2027, while debt-to-GDP is forecast to increase from 115.6% in 2025 to 120.2% in 2027. Public expenditure reached 57.2% of GDP in 2025, the second highest in the EU.
The Council recommends that France adhere to net expenditure growth limits of 0.8% in 2025, 1.2% for 2026-2028, and 1.1% in 2029, with cumulative growth from the 2023 base year of 4.6% (2025), 5.8% (2026), 7.1% (2027), 8.4% (2028), and 9.5% (2029). To achieve these targets, France must enhance spending reviews and permanently reduce public spending. The recommendation also calls for a reduction in the tax burden on labour and productive capital, while raising consumption and environmental taxes, and rationalising fiscal expenditures, which amounted to nearly 6% of GDP in 2025.
On the pension front, the 2023 reform, which raised the retirement age, has been suspended until January 2028. The Council urges France to preserve its impact on financial sustainability over the period 2026-2040, implying that the reform's long-term effects should not be undermined by the suspension. Additionally, France must reduce administrative complexity, clarify competences across government levels, and address regional disparities in healthcare, education, mobility, and housing, particularly in rural areas.
The recommendation carries significant implications for key stakeholders. For the French government, it imposes strict fiscal consolidation targets that will require politically sensitive spending cuts and tax reforms, potentially affecting public services and social programmes. French businesses may benefit from a reduced tax burden on labour and productive capital, which could lower costs and improve competitiveness, but may face higher consumption and environmental taxes. French citizens, particularly pensioners and workers, face uncertainty due to the pension reform suspension and potential changes to the tax mix, which could affect disposable income and access to public services. EU institutions and other member states will monitor France's compliance closely, as the excessive deficit procedure remains in abeyance and could be reactivated if targets are missed.
The Council recommendation is non-binding but carries political weight. The next steps involve France submitting a national reform programme and stability programme update, which the Commission will assess. The Council may issue further recommendations or, if compliance is insufficient, recommend the reactivation of the excessive deficit procedure.