French Premier Proposes Putting Off Pension Overhaul

 

 

As part of his initial economic platform starting in 2017, Emmanuel Macron implemented significant tax cuts that largely benefited the wealthy and businesses, earning him the nickname "president of the rich" from his critics. To pay for it Macron decided to force elderly French work longer. Now this disastrous plan unraveled.

 

Before this end, key Macron’s measures included:

 

    Abolition of the wealth tax (ISF): Macron replaced the comprehensive wealth tax on all assets with a narrower real-estate wealth tax (IFI), which only applies to real estate assets over €1.3 million. This change removed taxes on financial assets like company shares and investments for wealthy individuals.

    Introduction of a flat tax on capital income: A flat tax of 30% was introduced on investment income, interest, and capital gains, replacing a progressive system that often resulted in higher rates for the rich.

    Corporate tax cuts: The official corporate tax rate was gradually reduced from 33% to 25% by 2022.

 

These policies were intended to stimulate economic growth and encourage investment in France, though studies on their effectiveness have yielded mixed results and critics argue they have increased inequality.

Due to recent budget crises, the French government has introduced new, temporary measures in the 2025 Finance Bill to increase revenue, including an exceptional tax on large corporations and a minimum tax for high earners, but these are seen as a shift in policy rather than a reversal of the initial cuts.

 

The unravelling and reversal is swift:

 

“PARIS -- French President Emmanuel Macron is ready to delay his signature pension overhaul to save what remains of his presidency.

 

Macron's newly reappointed prime minister on Tuesday proposed suspending increases in France's retirement age until after the next presidential election in 2027, a bid to calm a political storm that threatens to take down France's fourth government in less than a year.

 

"Is the government ready for a new debate on the future of our pension system? The answer is yes," Prime Minister Sebastien Lecornu said in a speech at the National Assembly on Tuesday.

 

The reversal is a stinging setback for Macron, who has long argued that raising the retirement age is the only way to preserve France's pension system and social model without further raising already-high taxes and debt. The overhaul, which gradually raises the retirement age to 64 from 62, became law in 2023 after an extended battle.

 

Macron's overhaul faced fierce opposition from the left and unions who argued that it didn't take into account workers who started at an early age or have physically demanding jobs. Macron invoked special constitutional powers to bypass parliament, angering protesters and opposition leaders.

 

Now, with Macron's minority centrist government teetering, suspending his overhaul offers him the most promising path to avoid another collapse and adopt a budget for next year. The government needs the backing of Socialists to survive.

 

Socialist lawmakers on Tuesday declared the suspension a victory. They said they wouldn't back no-confidence motions put forward this week by far-left and far-right parties in the National Assembly, France's lower house of Parliament.

 

"We are capable of compromise, we have demonstrated this," said Boris Vallaud, the leader of the Socialist group in Parliament, adding he was ready to take part in budget negotiations. "We are also capable of overthrowing a government."

 

Lecornu said the suspension would cost an estimated 400 million euros, or $464 million, in 2026, and 1.8 billion euros in 2027. It will have to be offset through cost-saving measures to avoid increasing the country's deficit, he added.

 

Lecornu said he would in coming weeks organize a conference on the future of the pension system. If a new agreement is reached, it will be submitted to Parliament, otherwise it will be up to presidential candidates to decide in 2027, he added.

 

The fall of another government in less than a year would leave Macron with limited options. He has ruled out resigning before his term ends in 2027. But he would be under significant pressure to dissolve the National Assembly again and hold new parliamentary elections. Polls show Marine Le Pen's far-right National Rally would gain seats in the National Assembly, moving it closer to power.” [1]

 

1. World News: French Premier Proposes Putting Off Pension Overhaul. Bisserbe, Noemie.  Wall Street Journal, Eastern edition; New York, N.Y.. 15 Oct 2025: A10.