[Decoding France] - Defense Spending and the Budget: Macron-Bayrou’s Three-Step Waltz

In politics, some choreographies unfold more gracefully than others. The one recently orchestrated by President Emmanuel Macron and Prime Minister François Bayrou around France’s National Day felt like a carefully staged three-step waltz. Step one: On July 13, Macron addressed the armed forces in his annual pre-Bastille Day speech, citing rising global instability to justify increased defense spending through 2027. Step two: On July 14, anewly revised National Strategic Review-a doctrinal text meant to align France’s priorities with the current geopolitical upheaval-was released. Step three: On July 15, Prime Minister Bayrou laid out the much-anticipated 2026 budget plan, revealing a sweeping €43.8 billion savings package-up from the initially announced €40 billion-including controversial measures such as scrapping public holidays and imposing a fiscal "frozen year." This bold juxtaposition-spending more on defense while dramatically slashing public expenditure elsewhere-raises a fundamental question: how can these seemingly contradictory imperatives be reconciled?

Act I: A President Confronting the Threat of War

President Macron, who has long embraced his role as commander-in-chief, has become more deeply involved in defense matters since the June 9 dissolution of Parliament and the deepening quagmire in Ukraine. Weakened on the domestic stage and faced with the return of Donald Trump to the White House, Macron switched focus to France’s strategic position. Politically expedient though this pivot may be, it reflects Macron’s long‑standing commitment to strategic autonomy and European defense-a vision he has advocated for since 2017, despite the occasional inconsistency, particularly in his rhetoric on Vladimir Putin’s Russia. More recently, Macron’s two‑hour phone conversation with Putin on July 1-covering both Iran’s nuclear program and the Ukraine War-raised eyebrows among Western allies yet underscored the president’s determination to reassert France’s position at the center of geopolitical diplomacy.

On July 13, Macron gave a stark speech to the armed forces: "To be free in today’s world, one must be feared. To be feared, one must be strong." He outlined the evolving nature of conflict-from the blurring of lines between the frontline and the homeland to the rise of AI, drones, electronic warfare, and new battlegrounds such as cyberspace, outer space, and the deep sea, along with the dawn of quantum technologies.

These assessments led him to announce increased military spending, raising the defense budget to €64 billion by 2027. Specifically, an extra €3.5 billion in 2026 and €3 billion in 2027 will be added to the current military budget (to put this in perspective, the military budget stood at €32 billion in 2017). While Macron deferred the funding details to Bayrou’s budget presentation, he was clear on one point: "We refuse to finance this rearmament through debt."

The expanded budget will help address strategic vulnerabilities, boosting ammunition stockpiles, air defense systems, electronic warfare capabilities, and satellite assets while significantly expanding training programs. Macron has also promised to provide further details on youth military engagement in autumn, when the Ministry of Armed forces report on this issue commissioned in January is expected to be complete.

Despite the dramatic rhetoric and headline-grabbing budget increases, the distance between France’s military spending and the threshold often cited as appropriate for major military powers remains considerable. These announcements are broadly in line with NATO’s revised objective that member states should devote 3.5 percent of GDP to military spending alone by 2035 (5 percent when including broader security). After peaking above 7.5 percent in the 1950s, France’s defense spending declined steadily throughout the twentieth century, reaching a low of 1.87 percent in 2012. It rose to 2.05 percent in 2024 and is projected to just exceed 2 percent in 2027-a visible uptick, but still far from the 3.5 percent of GDP that would signal a true strategic leap.

Act II: A Strategic Review for a Disrupted World

The second act in Macron and Bayrou’s three-step waltz came on July 14 with the release of the revised National Strategic Review (NSR). This doctrinal document serves as a strategic compass, mapping out France’s long-term security priorities and updating the threat assessment. The previous edition, drafted hastily in early 2022 after Russia invaded Ukraine, has been replaced by a more sober and far-reaching reflection extending to 2030.

Macron previewed its themes in his speech the day before its release: "This review offers a clear diagnosis: there is growing willingness to resort to the use of force and increasing violence not always perpetrated by states nor targeted at combatants," he said. The document also reaffirms the ongoing threat posed by terrorism, particularly Islamist extremism.
Ukraine remains a focus: "Our partnership with Ukraine must stay central to NATO strategy," the review states, while calling for ongoing dialogue and a firm response to the Russian threat. These formulations reflect concerns about the dismantling of NATO’s counter-disinformation unit, which targeted Russian narratives.

This year’s NSR extends beyond military affairs, touching on environmental threats and paving the way for Bayrou’s more comprehensive economic measures, announced the following day.

Structured around eleven strategic objectives-one more than in 2022-the review maintains pillars such as nuclear deterrence, national resilience, and wartime economy, while adding a new goal: "Academic, Scientific, and Technological Excellence."

In a marked departure, the 2025 NSR emphasizes the preservation of long-term expertise critical to French and European sovereignty, ranging from AI and quantum computing to nuclear safety and propulsion systems. The laws governing research programs will be reinforced to protect "fundamental technologies," including emerging fields such as renewable energy and geosciences.

Although climate change doesn’t receive a dedicated chapter, the issue permeates the entire document. A standout quote reads, "The State will prepare the nation for a France that is +4° C warmer by century’s end." Henceforth, a 30-to-50-year planning horizon will be a requirement for all public policy; the review also explicitly warns of the "weaponization" of issues such as food, water, and energy.

The review also adopts a more anxious tone regarding the transatlantic relationship and nuclear deterrence. Terms such as "uncertainty" and "erosion of security frameworks" signal deep unease in Paris over Trump’s post-2024 geopolitical realignment. The review notes, "The US is asserting differences in views and values with Europeans," warning of unpredictable US foreign policy and potential fallout for NATO.

For the first time, the implementation of the NSR will be tracked-marking a shift from its previous status as a largely theoretical or midterm review exercise.

Act III: Bayrou’s Austerity Act

The third act—and perhaps the most contentious—in the political three-step waltz was Bayrou’s unveiling of the 2026 budget plan. Long known to be politically hazardous, the budget carries an immense risk of censure. The prime minister’s timing was calculated: Riding the wave of presidential solemnity, he echoed its tone of urgency—one that cast a shadow of anxiety over the entire sequence, blurring the lines between national and international threats, between security imperatives and budgetary constraints.

The budget’s key measures include the following:

• Abolition of two public holidays
  Bayrou proposed scrapping Easter Monday and VE Day (May 8) while remaining open to other options. France currently has eleven public holidays per year; this move could save between €3 and €4.5 billion.
• A “white year” freeze on spending
  In 2026, tax brackets, social benefits, and pensions will not be adjusted for inflation, generating €7 billion in savings. Retirees will also lose their tax break on professional expenses, replaced by a flat €2,000 deduction—a move designed to shield smaller pensions.

• State spending to be frozen at 2025 levels, excluding debt service and defense increases.
• €5 billion in healthcare savings, including higher out-of-pocket caps (up to €100 annually per person), stricter controls on medication reimbursements, and potential removal of full coverage for chronic illnesses if no longer medically justified.
• €5.3 billion from local governments, representing 13 percent of the total effort.
• A “solidarity contribution”
  The wealthiest households and large corporations will be asked to contribute more, though details remain vague and subject to parliamentary negotiations.
• Public sector downsizing
  The government plans to cut 3,000 civil service jobs starting in 2026 alongside a new rule stipulating that only one in three retiring public employees will be replaced in subsequent years—potentially amounting to over 30,000 non-replacements annually.
• Target deficit: 4.6 percent of GDP in 2026 (down from 5.8 percent in 2024).

Act IV: A Tumultuous Autumn Ahead?

In a display of almost ritualistic mimicry, opposition parties from across the spectrum rushed to denounce the plan—each seizing on a convenient pretext to brandish the threat of a censure motion, as if following a script they all knew by heart.

The abolition of public holidays drew the most ire—especially from the National Rally (RN), whose leader Jordan Bardella called it "a direct attack on our history, our roots, and working France." Many suspect this proposal to be a decoy—designed to be an easy bargaining chip in future negotiations.

The Socialist Party also balked. MP Boris Vallaud denounced the budget as "brutal and unacceptable." Both the left and the far right argue that the plan unfairly burdens the middle class through stealth tax hikes and benefits freezes.

Marine Le Pen described the measures as "nearly €20 billion in taxes and hardship," claiming the government should instead target "waste," immigration costs, hospital bureaucracy, and education inefficiencies. She warned, "If Bayrou doesn’t revise his plan, we will censure him."

Earlier this month, left-wing MPs attempted to bring down the government—but RN refused to back the motion, sealing its failure. Bayrou survived thanks to RN’s tacit abstention, which carried the message: We’ll see you in the fall, at the budget vote.

The timing of Bayrou’s speech was savvy: Parliament had just gone into recess for the summer, preventing immediate censure and buying precious time. With MPs on holiday until September, backchannel negotiations may soften positions.

Will that be enough to save his government? Whatever the outcome, Bayrou may still claim credit for having tried—and not half-heartedly. After all, it was he who forced his way into Matignon just eight months ago; he is unlikely to let anyone else choreograph his exit. If this three-step waltz ends in discord, he may well be preparing his own final flourish—a departure on his own terms, to the rhythm he set from the start.

Copyright Ludovic MARIN / AFP