The government prepares new budgetary savings to cope with the cost of the war in the Middle East.

The conflict in the Middle East weighs heavily on French public finances. The government is set to announce new cost-cutting measures on the morning of Tuesday, April 21 to address the economic downturn.

Published on: April 21, 2026 08:14, Updated on: April 21, 2026 08:14
Reading time: 3 minutes

The war in the Middle East is impacting public finances, leading the government to announce new budgetary savings measures on Tuesday, April 21. A strategic meeting is scheduled to take place from 9 am at the Ministry of Economy and Finance: the Public Finance Alert Committee.

This working group brings together parliamentarians, representatives from local authorities, social security, unions, as well as five ministers: Roland Lescure for the Economy, David Amiel for Public Accounts, Jean-Pierre Farandou for Labor, Stéphanie Rist for Health, and Françoise Gatel for Territorial Planning.

Two months after the bombings in Iran began, the government is facing the financial consequences of the war. It’s not the cost of military efforts that is weighing down as France is not directly involved in the conflict. The real impact, and one that will increase in the following months, is the economic slowdown and the loss of revenue for public finances, with reduced earnings against rising expenses to support households, businesses, and sectors directly affected by the crisis.

In fact, the government has already revised its growth forecast downward for this year. Due to the surge in energy prices, GDP growth is expected to drop from 1% to 0.9%, and inflation, which has started to rise, is nearing 2%, up from the initial prediction of 1.3%. Therefore, savings are necessary to cover unforeseen expenses. An estimated four billion euros in savings on state spending and two billion on social security are being discussed, with around two-thirds for the state and one-third for social spending. The approach for social security remains unclear, as it seems challenging to cut benefits. However, for the state, there are talks of canceling or freezing credits for ministries, even though some, like Defense, are expected to be spared.

Not to mention the increase in debt service costs, meaning the interest cost of borrowing. The principle of “one euro spent = one euro saved elsewhere” is being considered. More details will emerge after the meeting of the aptly named Public Finance Alert Committee, which is expected to go beyond a mere formality.