The finance ministers of the European Union (EU), meeting on Tuesday January 21 in Brussels, formally validated France's budgetary plan, despite a smaller reduction in the public deficit in 2025 compared to the initial project. This approval was expected after the positive opinion given by the European Commission.
In total, the multi-annual budgetary trajectories of 21 EU member countries were approved on Tuesday. The plans of the other six countries, including Germany, will be presented late, they will have to be evaluated later.
France estimates that its deficit will have reached 6.1% of gross domestic product (GDP) in 2024, well above the 3% limit authorized by European budgetary rules. The government of Prime Minister François Bayrou announced “significant savings” in order to reduce this indicator to 5.4% in 2025, with the objective of returning below the ceiling of 3% in 2029.
The second worst public deficit ratio of the Twenty-Seven
For this year, the objective is less ambitious than that of the previous French government, of Michel Barnier, which aimed for 5%. However, Paris undertakes to increase the effort afterwards to return to respecting community rules in four years.
France “maintains the overall level of ambition over the adjustment period”welcomed the European Commissioner for the Economy, Valdis Dombrovskis, during a press conference. “It’s a budget that will require effort from everyone, but we must do it in the interest of the country”French Finance Minister Eric Lombard told the press after the meeting, thanking his European counterparts for their support, and Mr. Dombrovskis for his “remarkable work”.
-France displays for 2024 the worst public deficit ratio of the Twenty-Seven, with the exception of Romania. It also has the third highest debt ratio, behind Greece and Italy. At the end of September, French public debt reached 113.7% of GDP, or 3,303 billion euros.
Since the summer of 2024, France has been part of a group of eight countries in the excessive deficit procedure, with Belgium, Hungary, Italy, Malta, Poland, Romania and Slovakia. These countries must take corrective measures to comply with EU budgetary rules in the future, or face fines.
Read the decryption | Where does the rule limiting the public deficit to 3% of GDP come from?
Read later
