Not a minute of grace for the next Prime Minister and his future government. Even before thinking about the State budget for 2025, which should in principle be finalized by mid-September and then debated by Parliament from 1is October, the new executive will find itself confronted with an unforeseen slippage in public finances. And will have to decide urgently what measures to take or not. This is what emerges from the note that Bruno Le Maire, the resigning Minister of the Economy, and Thomas Cazenave, his Minister Delegate for Public Accounts, sent on September 2 to the parliamentary members of the Finance Committee in the Assembly and the Senate.
“There is a serious slippage in public finances,” we recognize at Bercy. For Bruno Le Maire, there is no other solution than to act quickly with strong gestures. He recommends making 16 billion euros of immediate savings on the budget for the current year. This is what he plans to tell the future Prime Minister, as soon as he is appointed.
The warning can be summed up in one figure: 5.6% of gross domestic product (GDP). This is the record level that the public deficit is likely to reach this year, according to the latest assessment carried out by the Treasury Department in Bercy. After peaking at 5.5% of GDP in 2023, a threshold that prompted the European Union to launch an excessive deficit procedure targeting France, this balance was supposed to decrease year after year. It was to return to 5.1% in 2024, and fall back to 3%, the maximum normally authorized by European rules, in 2027.
Tax revenues lower than expected
However, if nothing is done, this public deficit is likely to continue to increase slightly instead of starting to decrease, fears Bercy. This would obviously constitute an execrable signal to both the European Union and investors. Enough to cause the rate gap between French and German ten-year yields to soar, a measure of the confidence – or distrust – of the markets towards France.
Read also | Article reserved for our subscribers Budget 2025: “It is not forbidden to dream of parties responsible enough to get out of the impasse”
Add to your selections
What happened? Two simultaneous movements, according to the letter from the resigning ministers to parliamentarians. First, the tax revenues collected since the beginning of the year are slightly lower than expected, as was already the case in 2023. “VAT, income tax and corporate tax revenues could be lower than expected,” write, without giving a precise figure, the two ministers about to leave Bercy. France’s growth, however, should be in line with expectations, around 1% or 1.1% in 2024. But this growth is revealed “less favorable to tax revenues” than expected, they note.
You have 44.49% of this article left to read. The rest is reserved for subscribers.
