Bruno Le Maire, the Minister of Economy and Finance, made a significant announcement at a meeting of top government officials in Paris on March 12, 2024. Just two months before the European elections, the government revised its deficit forecast for the current year to 5.1% of the Gross Domestic Product (GDP), up from the previous estimate of 4.4%. This adjustment means that an additional 10 billion euros in savings will need to be implemented in 2024, on top of the 10 billion euros in credit cancellations that were already made in February. This news comes at a bad time for the majority, which has been divided over the country’s financial situation and the necessary corrective measures.
The finalization of the “stability program” was tense, highlighting the prevailing nervousness. The High Council of Public Finances, which is supposed to provide its opinion, did not receive the complete document on Tuesday night as expected. Only the macroeconomic scenario was transmitted, causing annoyance and dismay within the council. The public finance data was reportedly only provided on Wednesday, a claim that Bercy denies. The “stability program”, which outlines growth forecasts and financial projections for the next few years, will be presented to the Council of Ministers on April 17 and submitted to the European Commission in the coming weeks, including the public deficit data.
The Minister of Economy had initially argued for a 4.9% public deficit, even if it required passing a supplemental budget this summer. However, after discussions with various ministries, the government realized that achieving this target without drastic cuts was too ambitious, leading to the decision to set it at 5.1%. Concerns have been growing in recent weeks about the government’s ability to bring the deficit below 3% of GDP by 2027 as promised. This was highlighted by the unexpectedly high public deficit of 5.5% in 2023, and the debt reaching 110.6% of GDP, according to data released by the national statistical institute.
Bercy was forced to lower its growth forecasts for 2024 to 1% from 1.4%, a figure that many economists still consider too optimistic. The deterioration of public finances since the fall has been attributed to a slowdown in the economy, gradually rising interest rates, and significantly lower tax revenues than anticipated, amounting to 21 billion euros less than expected. These factors contribute to the challenges facing the government in meeting its financial targets and addressing the increasing levels of public debt. The situation underscores the need for credible commitments and effective measures to stabilize the economy and restore fiscal discipline for the country’s long-term financial sustainability.
