Key Takeaways from Bayrou’s Speech on Retirement, Health, and Proportional Representation – January 14, 2025

Prime Minister François Bayrou has reopened discussions on pension reforms, aiming for a collaborative approach with social partners. He announced a review of the pension system’s finances and emphasized the importance of reaching a just agreement before the upcoming Social Security budget. Additionally, he addressed budget challenges, health sector funding, voting system reform, and support for local authorities, promising significant savings and commitments to uphold financial expectations and constitutional timelines in various regions.

A much-awaited negotiation has taken place, but tangible announcements were scarce. During his recent address to the Assembly, Prime Minister François Bayrou made a commitment to revisit the pension ‘project’, yet he offered limited updates on other pressing issues.

Pensions ‘Under Review’

After two years since the controversial reform implemented by his predecessor, Elisabeth Borne, François Bayrou has decided to bring this topic back into discussions with social partners for a short period.

In the short term, the Prime Minister plans to request the Court of Auditors to conduct a ‘flash mission’ over the next few weeks to provide an ‘accurate and current overview of the pension system’s finances’.

Additionally, Bayrou announced the establishment of ‘a permanent delegation’, which is set to convene as early as Friday. He aims to invite representatives from each organization to collaborate at the same table for three months, guided by the findings from the Court of Auditors.

‘I firmly believe that we can explore a new reform path, free from any taboos or sacred cows, including the retirement age,’ he stated, emphasizing that this can only occur if it does not compromise the financial stability of the pension system.

‘Should we reach a balanced and just agreement during this conclave, we will implement it,’ he noted, setting a ‘deadline’ aligned with the upcoming Social Security budget this fall. If no agreement is achieved, the current reform will remain in effect.

Budget Challenges Ahead

Mr. Bayrou urged Parliament to ‘promptly approve’ the State and Social Security budgets, which have been pending since the censure of the Barnier government last December.

‘We are all bearing the consequences of this budgetary instability,’ the Prime Minister remarked, while revising the economic growth forecast for 2025 down from 1.1% to 0.9% of GDP.

The public deficit is now projected to reach 5.4%, a slight increase from the previous estimate of 5%, yet the objective remains to reduce it to a maximum of 3% as permitted by the European Commission by 2029.

To accomplish this goal, ‘significant savings will be proposed’, Mr. Bayrou indicated, though he did not provide further specifics. He also announced the ‘creation of a special fund dedicated exclusively to State reform’, which will be financed through the sale of certain assets, notably real estate.

Health Sector Expansion

There will be no cuts to the reimbursement of medications or medical consultations. Mr. Bayrou confirmed that the ‘de-reimbursement measure’ considered by Michel Barnier and later abandoned due to pressure from the RN ‘will not be revisited’.

In fact, the government intends to propose ‘a significant increase’ in health spending to ‘enhance working conditions for caregivers and protect the most vulnerable individuals,’ paving the way for growth that exceeds the previously suggested 2.8% increase.

The Prime Minister also reaffirmed the commitment to ‘fully reimburse wheelchairs by 2025’, a promise made by Emmanuel Macron nearly two years ago.

Voting System Reform and Local Governance

Mr. Bayrou revisited a topic close to his heart, advocating for ‘progress on the reform of the voting system’ for legislative elections, particularly proposing the ‘adoption of the proportional principle for better representation’ while remaining ‘anchored in local territories’.

This proposed reform ‘will necessitate addressing the simultaneous responsibilities at both local and national levels’, he continued, aligning with Senate President Gérard Larcher’s position favoring the return to mandate accumulation.

The Prime Minister also resurrected another of his proposals: the creation of a ‘democracy bank’ to enable political parties to secure funding from ‘public bodies’ rather than relying solely on private banks.

Support for Local Authorities

Emphasizing the importance of local authorities, Mr. Bayrou assured that the financial expectation set for them in the 2025 budget will be scaled back from ‘5 to 2.2 billion euros’.

In terms of Corsica, the Prime Minister committed to ‘upholding’ the timeline for ‘constitutional evolution by the end of 2025’.

Similarly, for New Caledonia, he expressed a desire for the political process to resume, with negotiations expected to conclude by the end of this quarter, and announced plans to invite political forces to Paris in January to initiate these discussions.

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