France is ready to engage in a standoff with Brussels. Caught in a protracted budgetary slump, ministers Antoine Armand (Economy) and Laurent Saint Martin (Budget) presented their budgetary battle plan until 2029 to the National Assembly this Monday. In this thick 218-page document, the executive plans to return to a deficit of 2.8% in 2029, compared to 6.1% in 2024.
To achieve a recovery of the accounts, the average adjustment each year would be 0.78 points of gross domestic product (GDP). This represents nearly 100 billion in savings to be made over the period. Placed in excessive deficit procedure since the summer, France must now give guarantees of rigor to the European Commission. The government must send this document to the Brussels authorities before October 31. A new deadline which adds to the path strewn with pitfalls of the 2025 finance bill.
Budget 2025: examination of the text begins in the Hemicycle
An effort concentrated on the first period
As a reminder, the executive plans a spectacular effort of 60 billion euros in 2025, divided into 40 billion euros in savings and 20 billion euros in taxes. This effort of 1.7 points of GDP « was concentrated at the beginning of the period for reasons of credibility with investors and citizens », Explained Antoine Armand’s entourage, during a press briefing with journalists this Monday.
« The pace will be slower in the coming years », promet-on.
In its presentation, the executive notably planned to cut tens of billions of euros in state, social security and community spending. But many measures remain to be documented. The government notably explained that certain cuts would be decided during discussions in Parliament.
The government’s gray areas on cuts in the 2025 budget
« Insufficient information »
In an opinion released on October 10, the High Council of Public Finances (HCFP) pointed out the shortcomings of the government’s budgetary strategy. Regretting in particular “ insufficient information “, the body chaired by Pierre Moscovici considers it difficult “ to appreciate the realism of the multi-year trajectory included in this medium-term budgetary and structural plan “. Experts have, for example, highlighted the absence of details on the composition of growth beyond 2025.
However, this parameter can have major consequences in terms of tax revenue. Part of the budgetary gap in 2023 and 2024 can be explained by the optimism of the forecasts on expected tax revenues from VAT. However, GDP growth this year was driven by foreign trade. It is in reality the drop in imports which favored the recovery of the trade balance. But this improvement has not been a lever for tax revenue unlike the VAT levied on consumption.
The French economy could stumble at the end of the year, fears INSEE
Reforms already underway
In terms of reforms, the document presented to deputies does not present anything new. « These reforms aim to show that France is engaged in a trajectory of recovery of public accounts », assures Bercy. Those around the ministers cited pension reform and unemployment insurance reform in particular. Other bills left fallow since June – such as that on business simplification – should be discussed again in Parliament.
For the Prime Minister, the coming months promise to be particularly stormy. The presidential camp is fracturing over taxation and immigration. And the oppositions are sharpening their weapons to destabilize an executive sitting on a volcano. It remains to be seen how the European Commission will judge this particularly unstable situation in order to restore public finances.
