Public deficit: a financial state under pressure

France’s public deficit is forecast to reach 5.6% of GDP this year, higher than the 5.1% previously anticipated. Forecasts for 2025 are even more worrying, with the deficit expected to rise to 6.2% of GDP. This deterioration is mainly due to higher-than-expected local authority spending and lower-than-expected tax revenues, as indicated in the budget documents recently published by Bercy.

Higher spending and economic forecasts

In a letter to the Finance Committees, the resigning ministers Bruno Le Maire and Thomas Cazenave expressed their concerns about the rapid increase in local government spending, which could lead to a €16 billion overrun on the deficit path initially forecast. Tax revenue forecasts have also been adjusted downwards. The revised government is now forecasting growth of 1.1% for 2024, compared with the previous estimate of 1%.

Budget 2025 and necessary savings

The budget for 2025, which remains to be adjusted in line with future priorities, sets a spending target equivalent to that of 2024, i.e. €492 billion, but with a modified breakdown. The forecasts indicate cuts in various sectors such as public development aid, sport, agriculture and health. The Chairman of the Finance Committee, Eric Coquerel, estimates that savings of €60 billion are needed to avoid a worsening of the deficit. If these savings are not made, the deficit could stagnate at 5.2% in 2025, despite significant spending cuts.

Call for a budget review

France must submit a new stability programme to Brussels by 20 September in order to avoid an excessive deficit procedure. Eric Coquerel is calling for a rectifying finance law, pointing out that current policy is leading the country towards increasing financial deterioration. The measures taken so far, including credit cancellations and budget freezes, may require further adjustments to bring the deficit under control.