The path to reducing the deficit will be difficult: Bercy indicated on Wednesday that it now anticipates a public deficit of 5.1% of GDP for 2024, which will require finding another 10 billion additional euros this year, for a return to 2.9 % of GDP in 2027. The high figure for the 2024 deficit, initially forecast at 4.4%, is the consequence of the strong slippage recorded in 2023, where it reached 5.5% of GDP instead of the 4.9% forecast, due to revenues much lower than expected, Bercy recalled during the presentation of its new French Stability program.
In February, to urgently restore the situation, the Minister of Economy and Finance Bruno Le Maire announced ten billion euros in savings on the state budget this year: this is the maximum that could be cut by decree, without having to go through a amending finance bill (PLFR) in Parliament. However, ten billion additional euros will have to be found this year to stay within the 5.1% deficit, Bercy warned on Wednesday, while the President of the Republic Emmanuel Macron and Prime Minister Gabriel Attal are opposed to a PLFR. These billions could partially be found in “fairly significant reserves” of ministries, Bercy indicated. But local authorities, “like other stakeholders and other public authorities”, will also be asked to be “stakeholders in this recovery”, warned the ministry.
On Wednesday, the government announced that it was still aiming for a return of the deficit to below 3% of GDP in 2027, in accordance with its European commitments. It plans to reach 2.9% of GDP in 2027, going through a deficit of 4.1% of GDP in 2025 then 3.6% in 2026. This trajectory is ambitious. To “go from 5.1% to 4.1%, we will have to be hyper concentrated, determined and responsible” for the 2025 budget, reacted the head of the Modem deputies Jean-Paul Mattei, who campaigns for “justice” measures. tax” such as the taxation of share buybacks in large companies, super dividends or for the increase in the flat tax (flat rate levy on property income) to 33%.
The executive is considering another path to restore public finances. He still refuses to increase taxes, even if Mr. Attal launched last week a parliamentary “task force” responsible for making proposals to tax “rents”, a concept still to be defined. The executive is instead betting on a return to growth: Bercy estimates that this should amount to 1% in 2024, 1.4% in 2025, 1.7% in 2026 and 1.8% in 2027, citing “signs of recovery”. Last week, Bruno Le Maire predicted in front of entrepreneurs “a real powerful economic boost in 2025 and 2026”.
The government will also have to make new, more drastic savings in the coming years. For 2025, he has already announced 20 billion in budget cuts across all three positions (State, Social Security, communities). Because restoring public finances and reducing the deficit is imperative in relation to the burden that the French debt will represent in the future, boosted by the rise in interest rates over the last two years.
According to government forecasts revealed on Wednesday, the debt would vary little between now and 2027 as a percentage of GDP, falling from 112.3% this year to 112%, but the burden itself would soar, from 46.3 billion euros in 2024 to 72.3 billion in 2027. After the disclosure of these main hypotheses on Wednesday, the Stability program will be presented to the Council of Ministers on April 17, and debated in Parliament on April 29 and 30, the minister announced of the Budget Thomas Cazenave, and Bruno Le Maire.
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