France's new Prime Minister Sébastien Lecornu has scrapped the "holiday abolition" plan that had brought down the previous cabinet. Experts said the decision, made a week after he took office, appeared to be a conciliatory gesture toward the left, mindful of the fierce public backlash. But because it came right after an international credit rating agency downgraded France's sovereign rating to a record low, it signaled a rough road ahead for governing amid concerns over deteriorating fiscal soundness.
In an interview with the regional outlet Sud Ouest on the 13th (local time), Prime Minister Lecornu said he wanted to "protect working people" and announced he would exclude the previous Prime Minister François Bayrou's plan to abolish two public holidays from next year's budget bill.
Earlier, the centrist Prime Minister Bayrou pushed austerity to reduce the snowballing national debt. As a key measure, he proposed scrapping two public holidays to boost productivity and collecting an additional €4.2 billion (about 6 trillion won) in tax revenue. But the plan immediately faced a fierce backlash. The opposition as well as public opinion boiled over, and the Bayrou cabinet ultimately resigned en masse after a no-confidence vote in the assembly on the 8th.
Although the new Prime Minister Lecornu has ultimately scrapped the controversial plan to cut public holidays, the road ahead is thorny. A day before the announcement, international credit rating agency Fitch downgraded France's sovereign rating by one notch, from "AA-" to "A+." It is the lowest rating among French governments on record. Fitch said in a report that, "as the no-confidence vote against the government shows, France's domestic politics are becoming more divided and polarized," citing political instability as the reason for the downgrade. France's fiscal deficit stands at 5.8% of gross domestic product (GDP), and government debt at 113%, far exceeding the eurozone thresholds (3% and 60%, respectively).
Prime Minister Lecornu now faces the difficult task of chasing both "fiscal austerity" and "political stability." Warning that he would "demand other sources of funding" in return for withdrawing the holiday abolition, he left the door open to further austerity. He also said he was ready to discuss "tax fairness and the distribution of burdens," hinting at the possibility of tax hikes.
At the same time, he foreshadowed belt-tightening measures for the government. To improve government efficiency, Prime Minister Lecornu raised the possibility of reorganizing the state apparatus, including consolidating or closing agencies. He also said, "We cannot demand sacrifice only from the public while those in top state positions make no effort," and announced he would abolish the last remaining privileges that had been given "for life" to some former ministers.