France could see its budget deficit spiral unexpectedly higher this year and next if extra savings are not found, the finance ministry warned in a letter to lawmakers, as the euro zone's second-biggest economy lurches deeper into political crisis.

France’s public finances are even more dire than feared following an “extremely rapid rise in spending”, Emmanuel Macron’s outgoing finance minister has admitted. Bruno Le Maire blamed lower tax revenues and a splurge by local authorities for a massive overshoot in spending compared with plans set out earlier this year.

Facing a potential budget deficit of 5.6 per cent instead of the targeted 5.1 per cent, France needs 15 billion euros in further savings due to weaker