2024-09-09 20:07:00
The budget marathon has turned into an obstacle course. A week after receiving a huge pile of budget documents, the Finance Committee of the National Assembly grilled the resigning Bercy ministers Bruno Le Maire (Economy) and Thomas Cazenave (Public Accounts) on Monday, September 9 for nearly three hours. Chaired by LFI MP Eric Coquerel, this committee sought to dispel the fog hanging over France’s budgetary situation.
After the higher than expected deficit in 2023, parliamentarians discovered last week in a letter from ministers that the situation of France’s public accounts was much more alarming than announced. Bercy is now counting on a deficit of 5.6% in 2024 instead of 5.1%, and 6.2% in 2025 instead of 4.1%, if 60 billion euros of cuts were not made.
The situation of public finances
Table of Contents
Table of Contents
Stunned, the Seine-Saint-Denis MP decided to summon the two ministers to the Palais Bourbon, pending the appointment of a new minister at Bercy. Emmanuel Macron is playing with time to make his economic policy irreversible. What guides the head of state is to continue his policy in favor of capital “, the MP said during a meeting with journalists last week.
Before the members of the Finance Committee, the Minister resigned paid tribute to the deputies and congratulated them on the work accomplished, before outlining the future projects of the Barnier government. The situation of public finances is the first challenge that Michel Barnier‘s government will have to face. It is the most urgent, the most difficult and the most political challenge. ” he insisted.
A deficit still possible at 5.1%, according to Bruno Le Maire
The outgoing Minister of the Economy took stock of his seven-year term at Bercy and took the opportunity to criticize recent criticisms of him. We can, and we must, maintain our 5.1% deficit in 2024, and it is entirely within our reach. »assured Bruno Le Maire before parliamentarians, despite “tax revenues (which) could be lower than expected” this year. The Bercy tenant notably recalled that the 5.6% forecast from the Treasury was based on a scenario with unchanged policy.
After mentioning the 10 billion in cuts in state spending decided by decree in February, the Bercy tenant recalled that he had planned another 15 billion in savings in 2024, but that he had been faced with several “difficulties”. He notably mentioned the disagreements over the presentation of a corrective budget. The choice of a corrective finance law would have been preferable because it is more democratic and more effective. “, he explained. Added to this was the decision to suddenly dissolve the National Assembly in June. His recommendations include: “the freezing of credit reserves of 16 billion euros” et « a meeting of the High Council of Local Finances ».
A busy budget calendar
The pressure is all the greater on Michel Barnier’s shoulders as France will have to quickly send a version of the 2025 budget to the High Council of Public Finances for advice and to the Council of State. Initially planned for mid-September, this sending could be postponed, like the request that France has just sent to the European Commission. Placed in excessive deficit procedure since this summer, France was initially due to present its medium-term budgetary strategy to the Brussels authorities.
But in view of the political situation, Michel Barnier’s government has asked the European authorities for additional time, according to information from The Sunday Tribune. As for the presentation of the 2025 Finance Bill scheduled for October 1, the scenario of a postponement is becoming more and more likely. Michel Barnier’s government could certainly take up the copy of the “reversible” budget left by outgoing Prime Minister Gabriel Attal, but the absence until now of a new Minister of Finance risks complicating the completion of the 2025 Finance Bill.
Growth in decline at the end of the year
Gross domestic product (GDP) growth could fall in the last quarter, to -0.1%, INSEE predicts. And, growth would be slightly lower in the second quarter and third quarter compared to what was expected (0.2% in the second quarter against 0.3%, and 0.4% against 0.5% in Q3) according to the latest economic update released this Monday, September 9. This slow activity risks reducing the growth acquired for 2025 and tax revenues already losing momentum. Enough to give Bercy accountants cold sweats.
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UK fiscal deficit
France’s 2025 Budget: Will it Lead to a Shutdown?
As the French government grapples with the challenges of presenting a budget for 2025, concerns are mounting about the possibility of a shutdown. With a deficit of 5.6% expected in 2024 and 6.2% in 2025 if 60 billion euros of cuts are not made, the situation is more alarming than previously announced [[1]]. In this article, we will explore the implications of France’s budgetary situation and the prospects for adopting a budget in 2025.
The Situation of Public Finances
The French government is facing significant challenges in managing its public finances. The outgoing Minister of the Economy, Bruno Le Maire, has highlighted the need for 60 billion euros of cuts to be made to avoid a deficit of 6.2% in 2025 [[2]]. The situation is further complicated by the decision to suddenly dissolve the National Assembly in June, which has led to disagreements over the presentation of a corrective budget.
A Deficit Still Possible at 5.1%
Despite the challenges, Bruno Le Maire has expressed confidence that a deficit of 5.1% can still be maintained in 2024, provided that tax revenues do not fall short of expectations [[2]]. However, the Treasury’s forecast of a 5.6% deficit is based on a scenario with unchanged policy, highlighting the need for urgent action to be taken.
A Busy Budget Calendar
The pressure is on Michel Barnier’s government to present a version of the 2025 budget to the High Council of Public Finances for advice and to the Council of State. Initially planned for mid-September, this sending could be postponed, like the request that France has just sent to the European Commission [[3]]. With France placed in excessive deficit procedure since this summer, the government must also present its medium-term budgetary strategy to the Brussels authorities.
Will France Adopt a Budget in 2025?
Despite the challenges, it is possible for France to adopt a budget in 2025. According to experts, the government can still adopt a budget with a caretaker government in charge of current affairs [[2]]. However, the absence of a new Minister of Finance risks complicating the completion of the 2025 Finance Bill.
Conclusion
France’s budgetary situation is complex and challenging, with significant risks of a shutdown if a budget is not adopted. However, with careful management and cooperation between the government and parliamentarians, it is still possible for France to adopt a budget in 2025. As the situation evolves, it is essential to monitor developments closely and take into account the implications for the French economy and citizens.
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France deficit 2024
France’s Budget Marathon: A Looming Deficit and Uncertain Future
The French government is facing a significant challenge in managing its public finances, with a higher-than-expected deficit in 2023 and a projected deficit of 5.6% in 2024 [[3]]. This has led to concerns about the country’s fiscal position and the need for urgent action to address the issue.
The State of Public Finances
The situation of France’s public accounts is more alarming than initially announced, with a deficit of 5.6% projected for 2024 and 6.2% for 2025 if 60 billion euros of cuts are not made [[1]]. The finance ministry has warned of a deficit risk due to tax revenue falling short of expectations and spending higher than predicted [[3]]. This has raised concerns about the country’s ability to manage its finances and ensure a stable economic future.
A Busy Budget Calendar
The French government has a busy budget calendar ahead, with the need to quickly send a version of the 2025 budget to the High Council of Public Finances for advice and to the Council of State. Initially planned for mid-September, this sending could be postponed [[2]]. This adds to the pressure on the government to address the country’s fiscal challenges and ensure a stable economic future.
Deficit Projections
The French finance ministry has projected a deficit of 5.6% in 2024, higher than the initial forecast of 5.1% [[3]]. This has raised concerns about the country’s ability to manage its finances and ensure a stable economic future. The ministry has warned that tax revenue could be lower than expected, and spending higher than predicted, which could exacerbate the deficit situation [[3]].
Budget Cuts and Savings
The French government has planned for budget cuts and savings to address the deficit situation. The outgoing Minister of the Economy, Bruno Le Maire, has recommended freezing credit reserves of 16 billion euros and holding a meeting of the High Council of Local Finances [[1]]. Additionally, the government has planned for 15 billion euros in savings in 2024, but has faced difficulties in implementing these measures [[1]].
Conclusion
France’s budget marathon has turned into an obstacle course, with a higher-than-expected deficit in 2023 and a projected deficit of 5.6% in 2024. The government must take urgent action to address the country’s fiscal challenges and ensure a stable economic future. This includes implementing budget cuts and savings, as well as ensuring that tax revenue meets expectations. The government’s ability to manage its finances will be crucial in determining the country’s economic future.
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