The French government presented on Thursday a draft finance law (PLF) for 2025 which provides for a budgetary effort of 60.6 billion euros via a reduction in public spending (41.3 billion) and increases in tax revenue (19 .3 billion).
After an expected slippage to 6.1% of GDP this year, the objective is to reduce the public deficit to 5% from 2025 then below the limit of 3% tolerated by Brussels in 2029. If nothing was done, this deficit would drift to almost 7% next year, according to the Minister of the Budget, Laurent Saint-Martin.
The debt, of nearly 3,230 billion euros at the end of June (112% of GDP), will approach 115% in 2025, while growth would reach 1.1% as in 2024.
The draft budget plans to curb spending by 40 billion euros. In a country which is the European champion, public spending will continue to increase, but less sharply.
Social security and pensions
The State will be the largest contributor, to the tune of 20 billion euros. 2,201 civil servant positions will be eliminated, notably in national education, and the ministries put on a diet: they will be asked to save 5 billion by amendment, in addition to a credit freeze.
Social Security will also be involved, with savings estimated at 14.8 billion euros. Health spending will nevertheless increase by 2.8% to reach 260.8 billion euros next year.
Among the main measures, the government intends to postpone from January 1 to July 1, 2025 the indexation of retirement pensions to inflation, by around 1.8%. A measure which should bring in 3.6 billion euros but which is already arousing strong opposition, particularly in the ranks of the National Rally, whose support is vital for the survival of Michel Barnier’s government.
Local authorities are asked to provide 5 billion euros. “Indignant”, the mayor of Verdun (Meuse) Samuel Hazard proposed “a widespread resignation from local assemblies”.
On the other hand, the budget of the Armed Forces must increase by 3.3 billion euros and reach 50.5 billion euros
Tax on the wealthiest
Furthermore, tax increases will reach 19.3 billion euros according to Bercy, a turnaround after seven years of tax cuts.
Some 65,000 of the wealthiest tax households (i.e. 0.3% of the total), earning more than 250,000 euros annually for a single person, will pay a surcharge for three years which will bring their minimum tax rate to 20% and should bring in 2 billion.
Around 400 companies with turnover exceeding one billion euros will pay more than the 25% corporate tax rate for two years, a measure expected to bring in 8 billion euros in 2025.
Sea freight companies like polluting transport will also pay their cost. The ecological penalty will be toughened. A tax on plane tickets is also envisaged by amendment for 1 billion euros.
agencies/ash
