European Commission blacklists France

This so-called “excessive public deficit” procedure launched by the European Commission is a first since the suspension of budgetary rules with the Covid crisis.

Brussels is launching, at the end of July (Friday 26), a procedure called “excessive public deficit” targeting seven Member States of the European Union, including France. The other countries blacklisted are Italy, Belgium, Hungary, Poland, Romania, Slovakia and Malta. In 2023, they exceeded the public deficit limit set by the Stability Pact at 3% of their GDP (Gross Domestic Product, i.e. the wealth produced in the year by their companies). These rules had been put on hold with the Covid pandemic in 2020, but they have since been relaxed and have just been reactivated, the crisis having passed.

Italy comes first with a public deficit of 7.5% of its GDP. Second is Hungary (6.7%); third is Romania (6.6%). France is fourth with a public deficit equivalent to 5.5% of its national wealth, just ahead of Poland (5.1%).

In principle, the Stability Pact provides for financial penalties of 0.1% of GDP per year for each country that does not comply with the rules. For France, this represents approximately 2.8 billion euros, which is not a small sum when we know that our public finances are already in very bad shape.

We are forced to take budgetary adjustment measures. Two weeks ago, the Minister of Economy of the resigning government, Bruno Le Maire, had indicated that Paris had to save 25 billion euros in 2024 to redress public finances. Fifteen billion have already been frozen in the credits of all ministries, it remains to find ten billion in the same vein, plus local authorities. A poisoned chalice for the next government team which will – normally – be in place at the start of the school year.

And this is where it gets complicated because we have to send the corrective measures by September! In any case, the European Commission will say in November the paths to take to restore our budgetary health. France will then have until the beginning of 2025 to comply, which represents a hot potato for whoever is going to settle in Matignon once the President of the Republic, Emmanuel Macron, has decided.