Lacking a formal budget for 2025, the government renewed at the last minute the spending ceilings for ministries initially granted for 2024, but intends to limit them to “essential spending” until a budget is adopted.
From January 1, ministries will be able to continue to incur expenses within the limit of what was provided for in the initial finance law of 2024, according to a decree published Tuesday in the Official Journal.
However, they must only consume “the minimum of credits that the government deems essential to continue the execution of public services”, indicated the Ministry of Public Accounts to AFP, in particular with regard to “essential expenditure”.
This concerns in particular the payment of salaries of civil servants. But, for example, “no net job creation will occur during” this period, specifies a circular sent to ministers.
Consulted by AFP, this document specifies that 75% of the credits granted Tuesday by the decree will be frozen at the start of 2025.
This freezing of credits will take place until the adoption by Parliament of a budget for 2025. Other credits could, however, be released if the budget is delayed in being adopted.
This is the first mission of François Bayrou, appointed Prime Minister on December 13.
Ready to “compromise” with the opposition, and anxious “that a budget be adopted”, the new Minister of the Economy, Éric Lombard, will try to proceed “through dialogue” by inviting all the parties represented in Parliament to come and discuss it at Bercy, he said on Sunday.
Mr. Bayrou hopes for an adoption “in mid-February”, without however being “sure of getting there”. To do this, he intends to start from “the copy that was voted on” in Parliament before the censorship of the government of his predecessor, Michel Barnier.
The previous government of Michel Barnier presented its draft budget for 2025 in October, showing a deficit as has been the case in France since 1975 despite the savings planned to reduce the “gap” between revenue and expenditure.
Among the options proposed, such as the partial deindexation of pensions next year, some displeased the deputies of the National Rally and the left, who voted on December 4 to censure the government, preventing the adoption of the draft budget without a vote via article 49.3 of the Constitution.
A special emergency law
Pending the adoption of a new budget, Parliament voted in mid-December for a special law which allows the executive to continue to collect taxes and borrow to finance the State and Social Security. and to spend the credits on the basis of the 2024 budget.
However, the special law does not allow the traditional inflation indexation of the income tax scale to be practiced. As a result, without a new budget, 380,000 new households risk being subject to income tax, and millions of taxpayers paying more.
As of January 1, the absence of a budget for 2025 will, however, have no immediate impact on French taxes, which will not be levied further, the Ministry of Public Accounts told AFP. The increase in income tax could, however, appear later, after the income tax declaration in the spring, if no budget is adopted by then. The withholding tax rate is updated in September.
Excessive deficit
Another consequence of the absence of a voted budget: basic pensions will be increased more than what Mr. Barnier's government planned in its project, at 2.2%.
For a basic pension of 1,200 euros for example, the increase represents an increase of 26.4 euros per month, which will be visible on the February payment.
Likewise, the price shield on electricity will end on February 1 but without the tax increase envisaged by the previous draft budget. A boon for households who will benefit from a 14% reduction in their bill.
France's public debt reached 113.7% of GDP at the end of September, or 3,303 billion euros, one of the highest in the euro zone, while the public deficit is expected at 6.1% of GDP this year. year, which earned the country an excessive deficit procedure by the European Commission.
Eric Lombard would like, in the budget to be voted in 2025, for the deficit to be recorded “a little above 5%” of GDP, “so as to protect growth”. This implies possible “very limited” tax increases but above all “additional savings”, he indicated.
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