The French budget for 2025, which must be presented on Thursday, “will be fully in line with the new European budgetary rules”, he promised during a meeting of 27 ministers.
Postponement of pension indexation, merger of certain public services, reduction in the number of civil servants, or contribution of the wealthiest to the budgetary effort: the measures already mentioned by the government demonstrate the significant efforts to be made to reduce the public deficit.
Convincing European partners promises to be just as difficult, as France has deviated from the threshold of 3% of GDP defined by EU budgetary rules and is now a bad student.
The stated objective is to reduce the deficit from 6.1% this year to 5% next year, before falling below 3% by 2029, two years later than what was promised by the previous government. .
“It is a serious, credible and ambitious trajectory for our country in order to fully respect the EU budgetary rules,” said Mr. Armand, upon his arrival in Luxembourg, for his first European meeting.
Paris was given a deadline until October 31 to present its multi-year trajectory of public finances which was initially expected on September 20.
Brussels plans to publish an opinion at the end of November on the plans of the 27 member states.
The European Commissioner for the Economy, Paolo Gentiloni, welcomed on Monday the first “promising” discussions with the new French minister. “We all recognize the difficulties” that France faces, he stressed.
“We don’t joke with the financial markets”
But the German Minister of Finance, Christian Lindner, warned that we should “not joke” with “the credibility of public finances vis-à-vis the financial markets”. However, he did not wish to comment directly on the seriousness of the French plan, pending explanations from the new minister.
“We must credibly reduce our deficit and our debt in order to be able to finance ourselves in a stable and efficient manner,” he simply underlined, in an implicit reference to increases in interest rates on the markets which increase the cost financing highly indebted countries.
The cost of the French debt has in fact increased significantly in recent months against a backdrop of political instability and new revelations on the extent of the deficit left by former minister Bruno Le Maire.
Respecting European rules “is a question of international credibility and sovereignty”, recognized Antoine Armand.
The debt, at 3,228.4 billion euros at the end of June, or 112% of GDP, has swelled by a thousand billion since 2017, when Emmanuel Macron became president. It will approach 115% next year, almost double the maximum set at 60% by Brussels, before gradually decreasing.
The “braking” of public spending is “indispensable, otherwise we are heading straight towards a financial crisis”, warned the French Prime Minister, Michel Barnier, on Friday.
France is the subject of an EU excessive deficit procedure, along with six other countries (Italy, Belgium, Hungary, Poland, Slovakia and Malta). Last year, these countries exceeded the 3% mark set by the Stability Pact, which also limits debt to 60% of GDP. They must take corrective measures, under penalty of financial sanctions.
However, this budgetary consolidation risks slowing down already very weak European economic growth, while Germany, the EU’s largest economy, is in recession.
Mr. Armand affirmed that he intended to get involved “personally” on the subject of “strengthening the competitiveness” of the European Union. “The EU is falling behind China and the United States in strategic areas,” he warned, referring to the reports of two former Italian Council presidents Mario Draghi and Enrico Letta, published this year.
He called for “the deepening of the European single market” and in particular the “Capital Markets Union”. It must help mobilize private money to finance the digital and climate transitions, a “fundamental project in view of the financing wall that stands before us”, he underlined.
