France's PM wants to scrap two public holidays to help fix public finances
"Everyone will have to contribute to the effort," Bayrou said, as he spelt out proposals that include freezing non-defence spending next year and not replacing one out of three civil servants when they retire.
President Emmanuel Macron has left Bayrou the task of repairing the public finances with the 2026 budget, after his own move to call a snap legislative election last year delivered a hung parliament too divided to tackle the country's spiralling spending and a surprise tax shortfall.
Long-time debt hawk Bayrou has tried to warn the French that broad sacrifices are unavoidable, although defence spending will be allowed to increase next year.
"It's the last stop before the cliff, before we are crushed by the debt," Bayrou said in a speech to members of parliament, cabinet members and journalists.
He said the French must not forget the experience of Greece, which went through a full-blown debt crisis over a decade ago and needed multiple international bailouts and years of tough austerity policies to get back on its feet.
"It's late but there is still time," Bayrou said, adding that France was addicted to public spending and had to change.
The squeeze will involve freezing pensions to the same level as they were in 2025, and other welfare and health spending will also be capped. Two public holidays could also be scrapped - possibly Easter Monday and May 8, which commemorates the end of the Second World War in Europe.
Bayrou, a veteran centrist politician, must persuade the opposition ranks in France's fractured parliament to at least tolerate his cuts, or risk facing a no-confidence motion like the one that toppled his predecessor in December over the 2025 budget.
If he fails, a new political crisis could trigger more credit ratings' downgrades and drive up the cost of interest payments, which are already set to become the single biggest drain on the budget at over 60 billion euros.
Any risk of a no-confidence motion would likely only firm up once a detailed budget bill goes to parliament in October.
As he announced a new hike in defence spending on Sunday, Macron urged lawmakers not to trigger another no-confidence motion, saying that the one in December had hurt companies and set a defence build-up back by delaying the 2025 budget.
Left-wing parties will likely baulk at welfare cuts, while the far right warns a broad spending freeze is unfair to French citizens and could prompt them to oppose Bayrou's plans.
In the final two years of his second term, the dramatic deterioration of the public finances may tarnish Macron's legacy.
A political outsider, he was first elected in 2017 on promises to break the right-left divide and modernise the euro zone's second-biggest economy with growth-friendly tax cuts and reforms.
Successive crises - from protests, COVID-19 and runaway inflation - have shown he has failed to change the country's overspending habit, however.
Bayrou aims to reduce the budget deficit from 5.4% of GDP this year to 4.6% in 2026, ultimately targeting the EU's 3% fiscal deficit limit by 2029.
With interest payments potentially becoming the biggest budget outlay, financial markets and ratings agencies are keen to see whether Bayrou can get his plans through parliament without triggering another political collapse.
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