Bruno Le Maire acknowledged the budgetary difficulties encountered by France in 2023, where the public deficit reached 5.5% of GDP, exceeding government forecasts. This slippage, according to the minister, is attributable to the economic impacts of the Covid-19 pandemic and inflation. “ We had a revenue accident “, he admitted, justifying the increased spending to protect the population against these crises. Despite these unforeseen expenses, the minister insisted on the need to restore public finances, a task he said he has already started.
Unexpected tax revenue
And then there is this famous kitty: « I can already tell you that our tax revenues today are good. As I speak to you, we have 3 billion euros in excess tax revenue compared to what was forecast in May 2024 ». Good news for the next government…
To respond to criticism from his political opponents, the tenant of Bercy (until when?) detailed the measures taken to reduce the deficit in the years to come. The government’s action plan provides for budgetary savings of an additional 20 billion euros in 2024, and another 20 billion in 2025, without increasing taxes. The objective is to reduce the deficit to 5.1% of GDP in 2024, to 4.1% in 2025, and to 3% in 2027, in accordance with the limits set by the European Commission.
France under European pressure
The announcement comes as the European Commission has opened the way for excessive deficit procedures against seven EU countries, including France. These countries, which also include Italy and Belgium, have exceeded the limit of 3% of GDP set by the Stability PactThey are now required to take corrective measures to comply with European Union budgetary rules in the future, or face financial sanctions.
The European Commission will formally propose the opening of these procedures at the next meeting of EU finance ministers on July 16. These budgetary rules were suspended after 2020 due to the economic crisis linked to the pandemic and the war in Ukraine, but they were reactivated this year. France, often in excessive deficit procedure since the creation of the euro, managed to escape this situation in 2017 after reducing its deficit. However, it once again faces challenges in complying with European requirements.
