Under strong pressure to find savings due to a “colossal” debt which worries the European Union, the French government unveiled its draft budget for 2025 on Thursday, which notably includes “exceptional” contributions requested from the wealthiest households. and large companies.
The government of Prime Minister Michel Barnier (right) has set itself the objective of reducing the deficit by 60 billion euros (CA$90.2 billion) in order to prevent it from exceeding 6% of GDP, a drift which has caused France to be the subject of a Brussels procedure for excessive deficit.
Paris will thus subject around 400 large companies, for two years, to an “exceptional contribution” on their profits made in France in 2024 and 2025 in order to participate in the recovery of public finances.
This measure, which concerns companies with a turnover of at least 1 billion euros, must bring in 8 billion euros in 2025 and 4 billion in 2026 (respectively 6 billion and 12 billion CA$).
The French government also plans to introduce for three years a “temporary and exceptional contribution” targeting the wealthiest households which would bring in 2 billion euros in 2025, in its draft budget for 2025 focused on the recovery of public finances.
This mechanism concerns those who are already subject to the exceptional contribution on high incomes (i.e. a reference income of 250,000 euros [376 000 $CA] for a single person and 500,000 euros [751 000 $CA] for a couple).
Furthermore, the government plans to introduce an “exceptional tax” on large maritime freight companies, which should bring in 500 million euros (CA$750,000 million) next year, and should only affect the main shipowner French CMA-CGM.
Limited room for maneuver for the EU’s highest debt
In a country which is the European champion, public spending will continue to increase, but less sharply. Some 2,200 civil servant positions will be eliminated, particularly in national education.
France saw its debt swell to 112% of GDP in June, the highest debt level in the European Union ahead of Greece and Italy. Its ten-year borrowing rate exceeded that of Spain on the debt market at the end of September, a first in almost 18 years.
Michel Barnier’s room for maneuver is, however, narrow, in the absence of a majority in the National Assembly. In addition, several ministers and deputies expressed their concern this week about the expected efforts.
“I want this effort to be fair and balanced,” Mr. Barnier said on Thursday, adding that “the attractiveness or credibility of the French signature must be preserved.”
Paris knows that its European neighbors are waiting for it, and on Monday sent its Minister of the Economy, Antoine Armand, to Luxembourg to try to convince its European Union counterparts of its budgetary seriousness.
Risk of destabilization
Michel Barnier, however, warned that France would not reach the deficit ceiling of 3%, in force within the euro zone, before 2029, two years later than the deadline set by the previous government.
For the 2025 budget, he estimated that reducing spending, the “first remedy” according to him, should save 40 billion euros (CA$60 billion).
The early legislative elections called by President Emmanuel Macron after the dismal failure of his party in the European elections in June resulted in a hemicycle fragmented into three blocks in the National Assembly.
Michel Barnier, who formed a government essentially from the right and the center right, will have to deal with the frontal opposition from the left, which tried in vain on Tuesday to bring him down with a motion of censure.
The draft budget is considered “austerity” by the left, but lacking “breakthrough” for the far right.
The leader of La France insoumise (radical left), Jean-Luc Mélenchon, described this budget project as a “calamity”, deploring “the 4,000 fewer positions in education”. “After spreading misery, here is the organization of ignorance,” he added on X.
The deputy of the National Rally (far right) Jean-Philippe Tanguy believes, for his part, that he “does not see a break with the mismanagement of the last 50 years”.
Mr. Barnier’s predecessor, Gabriel Attal, said on Wednesday that he feared “too many taxes” and “not enough reforms”, “with the risk of destabilizing our industries and the working middle class”.
In this context, no one imagines that the government will be able to exempt itself from using article 49.3 of the constitution, which allows a text to be adopted without a vote.