(Le Figaro, Julie Ruiz Perez, April 8, 2026)
The energy crisis triggered by the conflict in the Middle East has caused fuel prices to skyrocket and drastically increased interest rates and inflation, putting French public finances under double pressure that leaves the State very little room to react to new shocks.
The government has already granted nearly 130 million euros per month in targeted aid to transporters, fishermen, and farmers, with a potential cost of up to 1.3 billion euros if extended until the end of the year, but unions and the most affected sectors are demanding further measures while the Minister of Public Accounts David Amiel warns that every aid must be offset by spending cuts because no freebies can be given.
The increase in interest rates on new debt issuance will cost about 3.6 billion euros more per year (300 million per month), accelerating inflation (from 0.9% in February to 1.7% in March and over 2% in spring) will increase spending on public purchases, automatic revaluation of the minimum wage (Smic), contribution relief on low wages, and possible requests for indexing social benefits, while worsening employment prospects will cause loss of contribution revenues and increase unemployment benefits.
Already granted aid and increasing pressure
“After delaying as much as possible precisely in the name of restoring public accounts, the government has resolved to support transporters, fishermen, and farmers with nearly 130 million euros monthly. These measures could cost up to 1.3 billion euros if applied until the end of the year, that is almost 0.05% of GDP.”
Minister Amiel’s warning
“Almost all unions were received on Tuesday at Bercy. The Minister of Public Accounts David Amiel has already warned that the government cannot give any freebies. All the State’s ‘targeted’ aid measures in response to rising fuel prices must be offset by spending cuts.”
Additional cost of debt
“The State must face the increase in its borrowing rates (which have risen by about 0.5 points since the beginning of the conflict). This annual extra cost of the French debt burden has been quantified by Bercy at nearly 3.6 billion euros, that is about 300 million euros per month.”
Effects of inflation on public spending
“The rebound in inflation could also lead to an increase in some public expenditures. When inflation exceeds 2%, the minimum wage (Smic) is automatically revalued. In this context, contribution reliefs on low wages will become more expensive, as will certain public sector wages that follow the increase in the Smic.”
Deterioration of employment prospects
“On the employment front, the crisis clouds the outlook. Insee recently raised its unemployment forecast to 8.1% at the end of the first half of the year, which will have the double negative effect of losing contributions but also increasing benefits.”
(Excerpt from the newsletter by Giuseppe Liturri)
