France’s Barnier entrusts budget dilemma to little-known duo

French Prime Minister Michel Barnier has handed a little known duo the task of plugging a huge hole in the budget, putting loyalty before political clout in the job description for his finance and budget ministers.

Ending weeks of suspense, Barnier unveiled his ministerial line-up late on Saturday, tapping 33-year-old junior lawmaker Antoine Armand for the prestigious economy and finance ministry.

Barnier also named Laurent Saint Martin, 39, head of the government office that promotes foreign investment in France, as budget minister, putting him directly under his purview rather than the finance ministry in a break with tradition.

Unknown outside of Parisian political circles, the two face huge pressure to figure out how to rein in France’s budget deficit as it spirals towards 6.0 per cent of GDP due to a tax shortfall and higher than planned spending.

Although they lack political weight, economists say they run little risk of putting President Emmanuel Macron’s legacy of tax cuts and pro-business reforms at risk - if they can get the 2025 budget passed.

“It’s a way of keeping policy continuity, they’re faithful and will follow Emmanuel Macron’s political line,” economist Mathieu Plane with the OFCE economics think tank said.

Armand, 33, is a relative political novice, serving as a lawmaker in Macron’s party since 2022 while Saint Martin only served one term, failing to win a second term in 2022.

It is still unclear which one will take the lead steering the 2025 budget bill through France’s deeply divided parliament, where they can expect a rough ride from opposition parties which could team up and vote through a vote of no confidence, potentially bringing down Barnier’s government.

Usually France’s finance and economy minister drafts and steers budget legislation through parliament with the budget minister in a junior role to iron out wrinkles.

In any case it will fall on Armand to defend the government’s budget choices in Brussels, where France’s European Union partners are unlikely to have much sympathy for Paris once again requesting more time to cut its budget deficit.

He will also have to represent France at international forums like the G7 and G20, where he will share the stage with far more experienced policymakers like US Treasury Secretary Janet Yellen.

HIGH STAKES BUDGET

Armand and Saint Martin will have to work around the clock to finalise the 2025 budget bill, which usually takes months of preparation and is due to be handed over to lawmakers by Oct. 1, although some limited leeway is possible.

While finance ministry officials have already done much of the grunt work, they will have to figure out how to balance tax hikes and spending cuts in a way that does not prompt a political backlash.

Though set against rolling back broader tax cuts under Macron, the outgoing government has left behind proposals for an increase in taxes on energy companies and a tax on big corporate share buybacks.

Broader tax hikes are likely to fall foul of the extreme right National Rally and Barnier’s own conservative Republicains party.

That means the brunt of the effort to narrow the budget shortfall will have to come from unpopular spending cuts, which will likely have to be about 20 billion to 30 billion euros ($22-$34 billion) depending on how fast the government decides to cut the deficit, according to calculations by the treasury.

As Armand and Saint Martin weigh tax hikes and spending cuts, Barnier and Macron will be looking closely over their shoulders, OFCE’s Plane said.

“It’s a guarantee that what has been done so far is not unpicked,” he added.