What Happens If France Doesn’t Pass a Budget by 2025
The recent censure of Michel Barnier’s government has thrown a wrench in France’s budget process, casting doubt on the chances of seeing Parliament adopt both the Social Security financing bill (PLFSS) and the finance bill (PLF) for 2025.
The tight deadlines mean that new budgetary texts prepared by a future government may not have time to be examined by the National Assembly and the Senate before December 31, 2024. This raises a critical question: What happens in France if no financing law is adopted by January 1, 2025?
In the United States, when elected representatives fail to agree on budgets by the deadline, the impact is immediate and drastic. This is known as a "shutdown," where any expenditure not essential to the functioning of the country comes to a halt. Administrations are closed, and a staggering 850,000 federal employees are technically unemployed.
But what about France? Could a similar scenario unfold?
While a complete shutdown like the one experienced in the US is unlikely in France, the consequences of not passing a budget by January could still be significant.
"Without a budget, we wouldn’t be able to finance public services, pay state employees, or carry out ongoing government projects," explained [Name], a French economist. "The consequences could be felt across all sectors."
One possible scenario is that the French government would operate under a provisional budget, essentially extending the previous year’s spending plan. This could lead to reduced public spending in some areas as the government prioritizes essential services. However, political gridlock could also result in a partial shutdown, with some government operations suspended temporarily until a budget is agreed upon.
"The negotiating process could extend into the first few months of 2025, which would create uncertainty and delay important decisions," stated [Name], a political scientist. "This instability could potentially harm the French economy."
The situation in France highlights the crucial role of timely budget decisions. Failure to approve a budget by the legal deadline could have far-reaching implications for
the country’s economy and public services, impacting millions of citizens.
While the coming months are likely to be characterized by political wrangling, it is crucial for the French government to find a solution and avoid the potential consequences of a budget impasse.
What are the potential economic consequences for France if a new government fails to negotiate a new budget plan by the January 1st, 2025, deadline?
## What Happens If France Doesn’t Pass a Budget by 2025?
**Host:** Welcome back to the show. Today we’re talking about the potential for a major political and economic crisis in France. The censure of Michel Barnier’s government has thrown the budget process into chaos, raising serious concerns about whether France will be able to pass a budget for 2025 in time. Joining us today is Dr. Anne Dupont, an expert on French politics and economics. Dr. Dupont, thanks for being here.
**Dr. Dupont:** It’s my pleasure to be here.
**Host:** So, let’s start with the basics. What are the potential ramifications if France doesn’t pass a budget by January 1st, 2025?
**Dr. Dupont:** Well, it’s a complex situation. Unlike the United States, where a budget impasse leads to a full government shutdown, France has a system of “provisional twelth” financing. This means that if no budget is adopted, the government can continue operating at the previous year’s spending levels for a limited period.
**Host:** So, is that a good thing? Does that mean there won’t be any disruptions?
**Dr. Dupont:** Not necessarily. While provisional twelth financing prevents an immediate crisis, it’s not a long-term solution. It limits the government’s ability to respond to new challenges and make necessary adjustments to spending priorities.
**Host:** And what about the 60 billion euros in tax hikes and spending cuts that were proposed in the draft budget?[[1](https://www.cnbc.com/2024/10/11/main-spending-cuts-tax-frances-2025-budget.html)]
**Dr. Dupont:** Those plans are now in limbo. The new government will have to decide whether to continue with those proposals, revise them, or come up with a completely new plan. This uncertainty can create anxiety in the markets and make it harder for businesses to plan for the future.
**Host:** This all sounds very worrisome. What are the possible outcomes of this situation?
**Dr. Dupont:** There are several possibilities. The most optimistic scenario involves the formation of a new government that can quickly negotiate a new budget plan. However, given the current political climate, this seems unlikely. A more likely outcome is a period of prolonged uncertainty and political instability, which could have damaging consequences for the French economy.
**Host:** Thank you, Dr. Dupont, for shedding light on this critical issue. Clearly, the coming months will be crucial for France’s economic and political future.
