David McNamara: European economies face fiscal constraints as monetary policy loosens

ECB expected to cut interest rates again this week as France faces significant budget deficit

French prime minister Michel Barnier’s draft budget includes €60bn in cuts.

While much speculation surrounds the contents of British chancellor Rachel Reeves' first budget on October 30, the budget presented by the new French government highlights the fiscal constraints facing some of Europe’s largest economies. 

Prime minister Michel Barnier’s draft 2025 budget includes significant cuts worth over €60bn, or 2% of GDP, weighted two-thirds towards spending cuts and one-third in tax increases. The measures include tax hikes on corporations and high earners, alongside reductions in welfare spending.