After the pandemic and the “whatever the cost”, France plans to return partly to the European nails by the end of Emmanuel Macron’s second term.
“We want to accelerate France’s deleveraging.” The Minister of Economy and Finance, Bruno Le Maire, presented Thursday, April 20 the new roadmap for public finances for the coming years. The government wants to preserve the “European credibility” of the country by raising its ambition in terms of debt reduction and deficit reduction by 2027, after the years marked by the health crisis and the “whatever the cost”.
The public deficit is expected to fall firmly below the 3% mark of gross domestic product (GDP) set by EU budgetary rules: 2.7% in 2027, against a forecast of 2.9% so far. After reaching 4.7% in 2022, it should rise slightly this year (4.9%) before gradually declining from 2024.
Deleveraging should also experience a boost, with debt representing 108.3% of GDP in 2027, or 4 points less than previously expected. The debt was at 111.6% of GDP at the end of 2022. The French forecast for 2027 remains however very far from the European objective of 60%.
“We absolutely must reduce this debt burden. (…) The choice is clear: either debt reduction now or taxes tomorrow.”
Bruno Le Maire, Minister of Economy and Financeat a press conference
The minister, however, categorically ruled out the latter scenario. These prospects are contained in the stability program (PSTAB) which will be presented to the Council of Ministers next week and which is transmitted each year by the EU Member States to the European Commission.
A “cooling” of public spending
The exceptional checks and the help of the State should end, the government affirming its will to engage a “cooling” of public spending. “We have just asked our compatriots to make an effort with the pension reform. (…) It is right that public actors are also involved”underlined Bruno Le Maire.
As for inflation, which the European Central Bank is trying to counter with interest rate hikes, it should start to slow from mid-2023, despite a forecast raised to 4.9% (from 4.2% previously) for this year. It had reached 5.2% in 2022.
At the same time, Prime Minister Elisabeth Borne asked the ministries “to identify 5% of room for maneuver on their budget to finance the ecological transition”according to Bruno Le Maire.