In the European Commission’s sights because of its deficits, France risks being financially sanctioned if it does not get on track. But its political weight could allow it to escape this.
(AFP / BERTRAND GUAY)
Why is France in proceedings?
With a public deficit of 5.5% in 2023 and a debt greater than 100% of GDP, France has been on a list of eight European countries in excessive deficit procedures since July, with European rules introduced in 1997 limiting them to 3% and 60% respectively.
The outgoing government has committed to returning below the 3% deficit threshold by 2027, a target considered implausible and obsolete by most experts.
This procedure is not new for Paris, which is used to being singled out by Brussels: it was on the list of countries being prosecuted for sixteen years between 1999 and 2024, more than all the other members of the EU.
What are the rules?
They were modified this year by the EU because they were deemed ineffective and risked installing austerity. From now on, a State must commit to returning to budgetary limits but with a little more flexibility than before, particularly on investment expenditure, and also risks less heavy fines. The adjustment can also be extended to seven years instead of four.
In concrete terms, the Member States, including those not subject to any procedure, were to present a budget plan to the European Commission on Friday, but Paris, like most of its partners, did not respect this deadline. No date has yet been set for France, which is slow to appoint a government. In any case, the country must theoretically submit the budget plan before the end of November, the date on which Brussels will submit an opinion.
The European institutions will then make recommendations to France, which will then have six months to take corrective measures, Andreas Eisl, a researcher at the European Jacques-Delors Institute, told AFP, then two months if the first warning shot has not resulted in any adjustments.
France’s public debt and deficit as a % of GDP since 1990 (AFP / Bertille LAGORCE)
If it makes no effort, France could then, according to the texts and very theoretically, be sanctioned next summer: up to 0.1% of its GDP over a year, or 2.8 billion euros, calculates the researcher.
Are they effective?
No EU state has been sanctioned since the rules were introduced, partly because the idea of imposing heavy financial penalties on a country in fiscal difficulty is seen by many as counter-intuitive.
“It has become easier and more incentivising to impose financial fines” since the reform, underlines Andreas Eisl because they are lower. In any case, the applicability of sanctions “remains a very, very political question” according to the researcher who points out that States remain sovereign on the question of the budget.
In any case, European rules retain a virtue according to experts: “history suggests that countries have generally tried to reach common ground with the EU, that is to say to adjust in the right direction without going at the speed demanded by the Commission”, analyses Lucio Pench, former director for macroeconomic policies of the Commission, today a member of the European think tank Bruegel, to AFP.
France could therefore escape sanctions by proposing cost-cutting measures, even if these do not go at the pace requested by the European authorities.
Does France benefit from a special status?
The French record for excessive deficits raises questions about a certain leniency on the part of the European Commission, summed up by the former President of the European Commission Jean-Claude Juncker, questioned in 2016 on the reason for the multiple exemptions granted to Paris: “Because it is France”, he replied, considering that “we cannot apply the Stability Pact blindly”.
A founding member and driving force of the European economy along with Germany, France enjoys a power of influence specific to the large EU countries.
“There is generally more pressure on smaller countries,” underlines Andreas Eisl, according to whom France, through the power and influence of its Ministry of Finance, is one of the states that can go so far as to contest the Commission’s assessments.
Related News :