French Prime Minister Michel Barnier opened a high-risk political sequence on Thursday, October 10, when he presented France’s budget bill for 2025. Between now and the end of October, the prime minister will unveil France’s budgetary strategy for the coming years, submitting to the European Commission his guidelines for putting France’s public finances on a sounder footing between now and 2031. With a deficit of 6.1% of gross domestic product (GDP) in 2024, according to the Interior Ministry’s latest forecast, and a debt representing over 110% of national wealth, Europe’s second-largest economy is worrying both its eurozone partners and the financial markets.
“Budgetary discipline is very important,” said Dutch Finance Minister Eelco Heinen on Monday at a meeting with his European counterparts in Luxembourg. “The credibility of public finances on the financial markets is no laughing matter,” added his German colleague Christian Lindner. In recent months, against a backdrop of political instability and several upward revisions to the budget deficit forecast for 2024, the cost of French debt has risen, widening the gap with Germany. In some cases, on five-year bonds, France pays more to borrow than Spain, Portugal and Greece.
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“I’m curious to know how France is going to get its public finances back on track,” said Lindner. The liberal minister will soon know since France, which is under the excessive deficit procedure along with six other member states (Italy, Belgium, Hungary, Poland, Slovakia and Malta), is preparing to send Brussels its roadmap for getting back into line with the Maastricht Treaty. Respecting European rules, which stipulate that the budget deficit must not exceed 3% of GDP when public debt must remain below 60% of national wealth, “is a question of international credibility and sovereignty,” said Antoine Armand, the Barnier government’s economy minister.
“Over the past few months, the government has constantly revised its figures, and we’re not used to such vacillation with France, which has created concern,” said Place Publique (center left) MEP Aurore Lalucq, president of the European Parliament’s Committee on Economic and Monetary Affairs. “Today, it’s a good thing we’re out of denial, we’re no longer dealing with a political power that’s talking nonsense. Now we need a credible long-term vision,” she said.
Choosing the pace of consolidation of public finances
“We have a real Barnier asset,” said Renew Europe MEP Fabienne Keller, for whom the prime minister – a European commissioner for almost 10 years – knows the inner workings of the institutions and benefits from “strong credibility in Brussels.” What’s more, Barnier already gave some indications of his intentions, which show that France intends to go beyond what EU budgetary rules might require.
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Publish date : 2024-10-11 01:39:00
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