The French government has requested an extension from the European Commission for the submission of its public deficit reduction plan, which was initially due by September 20th. The Ministry of Finance confirmed this request, stating that it was necessary to ensure coherence between the plan and the 2025 budget law. France, along with six other EU member states, is under scrutiny for excessive deficit and is required to submit its plan to reduce public deficit until 2027, aiming to return to the 3% limit allowed by then. The deadline can be extended if both the member state and the Commission agree.
In France, unexpected increases in local government expenditures combined with disappointing tax revenues could lead to a public deficit of 5.6% of GDP this year, potentially rising to 6.2% in 2025, compared to 5.5% in 2023. The government has prepared a “reversible” budget for 2025 that maintains state expenses at 492 billion euros, with a different allocation among ministries. Despite announcing 25 billion euros in savings, only 10 billion have been achieved so far due to the early legislative elections. Realizing the goal of returning the deficit below 3% by 2027 would require approximately 110 billion euros in savings by then.
The Court of Auditors has warned that the French government’s multi-year financial trajectory, submitted to Brussels in the spring, is no longer viable. A projected return to the 3% deficit target by 2027 would necessitate significant cost-cutting measures totaling about 100 billion euros within three years. This scenario has been deemed politically challenging, socially unacceptable, and economically inconsistent by experts. Overall, the financial outlook is uncertain, and achieving the necessary savings to meet EU budgetary rules poses significant difficulties.
The challenges facing France’s public finances have prompted concerns from experts and government officials. Despite efforts to rein in spending and increase revenues, the country continues to face a growing public deficit that is straining its fiscal stability. The need to realign budget priorities, reduce expenditures, and enhance revenue generation has become crucial to avoid potential financial penalties from the EU. The current economic landscape necessitates careful planning and swift action to address the structural issues affecting France’s fiscal health.
In conclusion, the French government’s request for an extension on the submission of its public deficit reduction plan reflects the mounting pressure to address the country’s fiscal challenges. The need for significant savings and budgetary adjustments to achieve long-term financial stability is a daunting task that requires careful consideration and strategic planning. As France navigates the complex economic landscape and strives to meet EU fiscal rules, policymakers and stakeholders must work together to develop sustainable solutions that promote financial health and stability for the country.
