France's growing deficit has dealt a blow to President Emmanuel Macron. Photo: YOAN VALAT/POOL/AFP via Getty Images
Emmanuel Macron and his ministers have been accused of losing control of France's finances after the budget deficit significantly exceeded forecasts.
Finance Minister Bruno Le Maire was forced to deny that the government will launch a tax raid to plug a gaping hole in the budget after the country borrowed more than expected last year.
Government deficit widens to 5.5% of economic output in 2023 from 4.8% in the previous year, which is much higher than the 4.9% PC that the government had planned. The deficit between tax revenue and government spending rose to €154bn (£132bn) last year.
Debt as a share of gross domestic product (GDP) in France now stands at 110.6%, according to statistics agency Insee.
The rising deficit is a blow to Macron, who has sought to bolster his reputation as a business-friendly and reliable economic figure since taking office in 2017.
Pierre Moscovici, head of the Court of Auditors , France's government auditor, warned that it is «very, very rare» that the government is wrong in its deficit forecast.
He told France Inter radio: «This puts us in an unfortunate position.» .
“We have the highest public debt in Europe — and it has increased by two percentage points since the Covid crisis — and we have the highest social contributions in Europe, and among them the highest public debt in Europe. We are third on the podium after Italy and Greece and the only ones whose public debt is not falling.
“And, in addition, we have the highest public deficit in the eurozone.”
While the debt-to-GDP ratio fell slightly last year from 111.9% in 2022, it remains well above the pre-pandemic level of 97.9% in 2019.
The latest figures cast doubt on Macron's strategy of gradually restoring finances by relying on growth-boosting reforms such as easing labor laws or raising the retirement age.
< p>France has already cut its growth forecast for this year from 1.4 % to 1% after growth of 0.9% in 2023.
Mr Moscovici said: “If you put it all together, we have reached a stage where… we have to tell the French the truth about the state of our public finances.”
“What do you expect from us? finance the additional expenses that we need for Ukraine when we have such debt?
France has announced spending cuts of 10 billion euros this year in an attempt to reduce its deficit to 4.4% of GDP. Like all eurozone members, France aims to keep its deficit below 3% of GDP.
The government has committed to saving an additional €12 billion in 2025, although Thomas Cazeneuve, France's budget minister, has suggested that Next year's savings target will have to be increased to 20 billion euros.
Charlotte de Montpellier, ING's senior economist, said this year's deficit-cutting target currently looked «totally unattainable».
Despite the government's treasury deficit, Mr Le Maire confirmed on Tuesday that he «completely opposed to any tax increases.» to close the gap.
He told RTL radio: “We can very well save on public spending without digging into the pockets of the French.”
However, Francois Bayrou, a key centrist supporter of Macron's government, said the topic of targeted tax increases should be discussed.
Bruno Le Maire ruled out the opportunity to “dig into the pockets of the French”; Photo: Ludovico Marin/Reuters
On Monday he said: “Lawmakers are considering options and ways to strike a better balance in terms of fairness without damaging the image of France as an investment destination.”
Ms de Montpellier said: “From the very beginning of Macron's presidency, the idea was not to raise taxes, just to regulate spending. Government supporters appear to be returning to the idea in recent days, with some mentioning targeted tax increases. Therefore, tax increases can no longer be ruled out.»
Bruno Retaillot, a spokesman for the centre-right French Republicans, warned: «We are the highest-taxing country in the OECD. If the government [raises taxes], it will be a mistake.»
Political opponents have seized on the worse-than-expected figures ahead of European elections in June.
Eric Ciotti, the head of the Republicans, called the rise in deficits and public debt «the latest Mozart symphony of finance.» (Macron's nickname),» adding that it «sounds like a swan song.»
Conservative friend Jean-François Husson said: «Bruno Le Maire has been discredited and lacking in credibility.»
In an interview with French newspaper Le Figaro this month, he said: “In 40 years, never The moment was right to better control government spending. We are quietly passing on a potential time bomb to future generations.»
Mr Macron is reportedly aiming to cut social security, which accounts for half of government spending, and force local authorities such as cities and regions to expenses rose faster than inflation to rein in their finances.
Свежие комментарии