In an effort to limit the public deficit in 2024, the government in France has proposed a new budget management law aimed at achieving further savings. Despite the extensive nature of the 187-page document, the government is hoping for a quick adoption of the law by Parliament. The goal is for the law to be promulgated by early December, as it includes both budget cancellations and new credits, such as those intended to secure government employee salaries and fund military support for Ukraine. While there is no majority in the National Assembly, the government is optimistic about the law’s quick adoption.
Prime Minister Michel Barnier has decided not to submit a true supplementary budget law to Parliament, which would have allowed for emergency fiscal measures to be implemented in 2024. Instead, the government is relying on the budget management law, a new type of law introduced in 2021, to make some last-minute savings. For example, the government plans to permanently cancel 5.6 billion euros of previously approved credits, many of which were temporarily frozen by Gabriel Attal over the summer when he was in office. This cancellation affects nearly all ministries and is aimed at addressing unavoidable expenses.
According to Budget Minister Laurent Saint-Martin, the government is pushing the limits of what is technically possible with these cancellations. Some critics, particularly among supporters of President Macron, have accused the new government of worsening the 2024 budget in order to focus on improving the situation in 2025. Earlier in the year, the government had already canceled 10 billion euros in credits when signs of budgetary issues first emerged. After the dissolution of the National Assembly, an additional 16 billion euros were put “on hold”. While not all of this amount can currently be canceled, three-quarters of it will not be spent in 2024, signaling the government’s commitment to austerity.
The current budget management law is seen as a stop-gap measure to address the public deficit in 2024, with more comprehensive budget reforms expected in the following year. Despite the government’s efforts to make savings through credit cancellations and reserves, there are still concerns about the overall state of public finances. The government’s decision not to introduce emergency fiscal measures in 2024 has raised questions about its strategy for fiscal consolidation and how it plans to address ongoing challenges. However, the government remains optimistic about the positive impact of these budgetary measures in the long term.
Overall, the government’s focus on controlling the public deficit in 2024 through the budget management law reflects its commitment to financial stability and responsible budget management. While the law is seen as necessary to address immediate budgetary concerns, there are lingering questions about the government’s long-term strategy for fiscal sustainability and economic growth. As the law moves through Parliament for approval, it will be important to monitor its implementation and impact on the wider economic landscape in France.
