France's new finance minister, the experienced Eric Lombard (banker, economist - newly nicknamed as 'Spider-Man') has relaunched the budget process that will determine the survival of the 'Bayrou' government, and potentially Emmanuel Macron himself.
Granted that the prime minister has been focused on other risks (environment event in Mayotte, farmer protests and a sharp deterioration in relations with Algeria), Lombard is producing the contours of a budget that simply put, favours politics over the bond market.
It is expected that the savings that the government aims for will be lower than that of the Barnier government and will aim to be driven by thrift and efficiency gains as opposed to higher taxes on the working/middle classes and pension cuts. A levy on air travel, 'extra' tax on large corporations and on share buybacks will be kept.
It is likely that the budget deficit target will be pushed higher (to 5.5% from 5%) which renders the exercise meaningless.
Lombard will have consultations on the budget with the main parties this week, starting with the Socialists, who are the main 'target' of the process in the sense that the government wants them to not vote with another censure, if that takes place. Apparently, feedback from the meeting with the socialists was positive.
Bruised by the budget process that Michel Barnier underwent, this government will tread carefully to find a compromise that the socialists in particular, can vote for. In the meantime, unless there is a sharp upswing in growth, Frances finances remain in poor shape, and there is no appetite in France to undergo austerity. It will be a difficult year for Macron., with many of his political opponents out to get him.