Bruno Le Maire has repeatedly stated his commitment to reducing the public deficit to less than 3% of GDP by 2027, despite a initial slip in public accounts. However, a report from the Treasury presented to parliamentarians by the outgoing Minister of Economy and Finance on September 2 paints a different picture. The report indicates that if no action is taken, France’s deficit will actually increase significantly, reaching 5.6% in 2024, 6.2% in 2025, and 6.7% in 2026, before stabilizing at 6.5% in 2027. This is far from the target set by Emmanuel Macron and his ministers. The intermediate target of 4.1% for 2025 is also deemed difficult to achieve, prompting discussions on setting a new acceptable timeline for deficit reduction.
Jean-François Husson, general rapporteur of the Senate Finance Committee, expresses bitterness over the realization that France will not be able to fulfill its promises regarding deficit reduction. Husson criticizes the delay in presenting the Treasury report, stating that the government had been aware of the situation but chose not to inform parliamentarians in a timely manner. The discrepancy between political objectives and the new deficit estimates is attributed to a deteriorating economic situation, potential decreases in tax revenue, uncontrolled increases in local government spending, and a lack of strong corrective measures. The government’s hesitance to implement budgetary adjustments or definitive spending freezes has led to a projected increase of 56.8 billion euros in the public deficit for 2025, according to the Treasury.
The failure to implement cost-saving measures or tax increases proposed by the Treasury is highlighted as a key factor contributing to the widening deficit. The absence of decisive action from the government, both in terms of budget adjustments and control over local government spending, has exacerbated the financial situation. Despite warnings from rating agencies and the Treasury report indicating the need for urgent measures, little concrete action has been taken to address the escalating deficit. The lack of progress in realizing proposed savings or revenue-generating measures has further complicated efforts to meet deficit reduction targets set by the government.
The escalating deficit poses a significant risk to France’s financial stability and credibility on the global stage. The widening gap between political promises and economic realities is a cause for concern, particularly as it may lead to downgrades in credit ratings and reduced investor confidence. The government’s handling of the evolving deficit situation, including delays in presenting key information to parliamentary committees and the failure to take decisive corrective action, has raised questions about its ability to effectively manage the country’s finances. As France grapples with the economic fallout from the COVID-19 pandemic and seeks to recover from the financial impact, addressing the growing deficit will be a critical priority for ensuring long-term economic stability and growth.
In light of the Treasury report and the acknowledgement of the widening deficit, there is a growing recognition of the need for urgent action to address the financial challenges facing France. The discrepancies between political promises and economic projections highlight the importance of proactive and strategic financial management to navigate through uncertain times. As discussions continue about potential measures to reign in spending, increase revenue, and stabilize the deficit, policymakers face tough decisions in balancing fiscal responsibility with the need for economic recovery and growth. The coming months will be crucial in determining the government’s ability to address the deficit and chart a path towards sustainable fiscal health and stability.
