The French government aims to cut tens of billions of euros in spending next year as it seeks to calm investor worries that have driven the country's borrowing costs to their highest levels in decades.

Whether the government manages to implement the planned cuts, however, is the question that has markets on edge.

On Thursday, the government outlined a 2027 budget proposal that contains 43 billion euros in cuts and cost-savings, equivalent to $49 billion, including steps to tighten spending on the country's bloated pension system. The measures are part of a EUR54 billion package that the finance ministry said aims to lower the 2027 budget deficit to 5% of GDP from 5.4% this year.

The budget proposal marks the start of negotiations with lawmakers in the National Assembly, which is fragmented between political parties that are warring ahead of next spring's presidential election. Over the past two years, the negotiations have blown past the end-of-year deadline with lawmakers voting to oust prime ministers who pushed for cuts.

The paralysis of France's political system has fueled a sharp selloff in the country's government bond market. France's 10-year government bond yield this week approached 5% for the first time since 2002. A closely watched barometer of financial-market stress on Thursday climbed to its highest level since the eurozone debt crisis. That measure, the difference between France and Germany's benchmark yields, has risen to 1.3 percentage point.

Investors are skeptical that Prime Minister Sébastien Lecornu will be able to fulfill promises to get a grip on France's finances before the presidential election.

"France nowadays is at a point where they don't see how to tackle the issue of public debt," said Christopher Dembik, senior investment adviser at Pictet Asset Management. "There is no easy way to deal with the situation. We won't get back to lower rates. We don't have strong economic activity. The only way will be to cut spending but no one wants to do it."

In recent weeks, the government has warned public finances are worsening. While interest rates are rising around the world, France is seen as particularly vulnerable due to a toxic combination of low growth and persistently large deficits.

The government warned in early September it would miss its 5% deficit target for this year. Higher interest rates are raising debt costs, while the war in Iran is pressuring the economy with higher energy costs. Compounding the problem, France must refinance a mountain of bonds it issued during the era of ultra-low interest rates in the coming years.

The government's debt agency this week said it plans to borrow a record $380 billion next year. The cost of servicing debt is expected to rise 15% to EUR91 billion next year, the government said Thursday.

President Emmanuel Macron has struggled to rein in spending that ballooned in response to the Covid-19 pandemic and the war in Ukraine. Macron showered the country with economic stimulus and introduced a costly program to cap energy prices.

France is also straining to adapt generous health and pension systems as its population ages, driving up costs. The government said it expects pension costs next year to reach EUR436 billion, equivalent to 14% of GDP.

On Thursday, the government said it plans to lower the rate at which it indexes many pension payments to inflation, a contentious measure that's expected to generate up to EUR6 billion in savings. The government is also capping tax deductions for retirees.

Any push to fundamentally overhaul the pension system is likely to run up against firm opposition. Macron tried to raise the age of retirement, but the government suspended that effort as part of negotiations to pass the previous budget.

Marine Le Pen, the far-right leader who is leading polls for the presidential elections, is pledging to push the age of retirement as low as 60 years old.