Budget cuts announced to restore public finances

The announcement comes as political negotiations intensify to form a new government, and the European Union keeps a close eye on France for its excessive public deficit.

A tighter budget. France must save 25 billion euros by 2024 to redress its public finances, 5 billion of which will be specifically requested from ministries via a letter signed on Thursday, July 11, said Economy and Finance Minister Bruno Le Maire. “Let’s be clear: by 2024, we need to achieve €25 billion in savings to meet our financial targets. We must act now, otherwise France will definitively distance itself from its 19 eurozone partners. That would be a major economic and political mistake,” asserted the Minister in an article published in Le Figaro.

Bruno Le Maire, who wishes to continue in office until a new government is formed, plans to sign “a letter of notification to all ministries” to “reduce spending in all ministries by 5 billion euros” and “freeze all credits exceeding these ceilings”, he said in a conference call. He did not specify the breakdown of savings requested from each ministry.

“I’ll leave the accounts in order”

To date, 15 billion euros in savings have already been “achieved”, according to Bruno Le Maire. Ten billion euros announced at the beginning of 2024 have been incorporated into State expenditure, and the increase in the domestic tax on final electricity consumption (TICFE) should make it possible to recover 5 billion euros.

A further 10 billion euros in savings remain to be found: 5 billion will be requested from ministries, 2 billion from local authorities, and 3 billion should be released through more effective taxation of energy companies’ rents, the Minister reiterated on Thursday. “We are implementing these additional 10 billion today,” he declared.

“I am still Minister of the Economy and Finance. My responsibility is to guarantee the continuity of the State and maintain the objective of a 5.1% public deficit in 2024”, he justified, recalling the target set by the government as part of the stability program. “It will be up to the next government to make the final decisions; I don’t have the legitimacy to anticipate spending for 2025. I will leave the accounts in order to reach the 5.1% target for 2024”, assured Bruno Le Maire.

Growing pressure. France, against which the European Union plans to officially open a procedure for excessive public deficit on Tuesday, must bring its public deficit within the European limit of 3% of GDP by 2027, after reaching 5.5% in 2023. It must also reduce its debt, which rose to nearly 3,160 billion euros at the end of March, or almost 111% of GDP, well above the 60% set by European criteria.