The French administration is implementing a 60-billion-euro reduction in its spending plan.
With a stern financial outlook, France's fresh conservative-liberal administration, led by Prime Minister Gerard, begins with a stringent austerity budget. The nation's alarming public debt level is seen as a potential danger by the new administration. Instantly, opposition surfaces from various political sectors in parliament.
The government aims to save an estimated 60 billion euros next year through reduced expenses and increased income revenues, as stated at a recent cabinet meeting. Approximately two-thirds of these savings would come from expenditure reductions, while the remaining third would be garnered through taxes targeted at high-earning corporations and wealthy households.
Rumors of excessive new debt have caused the EU Commission to initiate a deficit investigation against France. By October's end, France is required to submit a budget consolidation strategy to Brussels. This year, France anticipates a budget deficit of 6.1%, which needs to be reduced to 5% by 2025 and under the European cap of 3% by 2029.
Budget Challenges
The austerity budget faces rejection in parliament even before its presentation. Left-wingers and right-wing nationalists, along with dissatisfied government members over spending cuts, have expressed concerns. The country's High Finance Council has also voiced reservations regarding the budget's feasibility, citing overly optimistic growth projections.
Due to the coalition government lacking a parliamentary majority, it might end up passing a watered-down version of the budget or force it through using a special constitution article, potentially overriding parliamentary representatives. The austere budget negotiations will undoubtedly present an early challenge for the new administration. Rumors of public demonstrations are not off the table.
France's defiance of the 3% deficit and 60% debt limits set by Brussels is not a novel occurrence. Over the past 25 years, France has experienced three separate deficit investigations spanning a total of 16 years - surpassing any other European country in duration.
The EU Commission closely monitors the austerity measures implemented by The Commission due to the deficit investigation initiated against France. In response to budget challenges, The Commission may consider imposing fines if France fails to meet the 3% deficit cap by 2029.
