Can the budgetary effort really save France?

France's budget deficit, which now stands at 173.78 billion euros, has become a key topic as it illustrates the growing challenges the country faces in maintaining its financial commitments. As the Covid-19 pandemic and support measures have ended, efforts to repair public finances appear to have encountered major obstacles. This budget gap exceeds forecasts, and requires ambitious but controversial revisions. In this context, the government is trying to convince both European institutions and internal political actors of the viability of its austerity plan to avoid a lasting deterioration of state finances.

A deficit out of control

France's budget deficit continues to widen, reaching 173.783 billion euros in September, according to recent data from the Ministry of Public Accounts. This figure is barely lower than last year's 186.123 billion euros, despite the end of the famous “whatever it takes” introduced during the pandemic and extended after the Ukrainian crisis. Antoine Armand, the Minister of the Economy, confirmed that the deficit forecast for 2024 is now set at 6.2% of GDP, well above the 5.1% previously envisaged. “We must recognize the weaknesses of our previous projections and act accordingly,” he said. declaredand highlights the scale of the challenge.

This shift in the deficit is explained in particular by lower tax revenues than expected. Despite attempts at stabilization, state revenues fell short of expectations, further increasing an already colossal deficit. In a context where the debt burden exceeds 50 billion euros, the second largest budget item after education, the room for maneuver is drastically reduced. The European Commission has even initiated an excessive deficit procedure against France, which is pushing the government to review its financial strategy.

The strategy to regain control of public finances

Faced with this budgetary impasse, the French government has no choice but to present an ambitious plan to reduce the public deficit to acceptable levels. The stated objective is to reduce the deficit to 5% of GDP by 2025 thanks to a budgetary effort of 60 billion euros, of which 20 billion will come from tax increases and 40 billion from a targeted reduction in public spending. “We are committed to restoring balance to public finances by 2029,” insisted Antoine Armand. It thus sets a deadline for returning to European standards, with a deficit limited to 2.8% of GDP.

However, this program is not unanimous within the National Assembly, where the debates revealed deep divisions. Parliamentarians, faced with an executive in a minority, could block the passage of this budget for 2025, which threatens to force the government to resort to article 49.3 of the Constitution to adopt the text without a vote. If this option is used, it will mark a new episode of internal political tensions, with possible repercussions on France's ability to restore investor confidence.

This record deficit and the political tensions it arouses underline the colossal challenges facing France in its quest for budgetary stability. As pressure from European authorities intensifies, the government is faced with a difficult dilemma: opt for drastic and unpopular reforms or risk losing even more financial credibility. The next steps will determine the resilience of the French strategy and its impact on the economy, in an increasingly uncertain context for public finances.