The latest alarming figures on the French public deficit sound like a warning. Indeed, this growing budgetary chasm threatens to scuttle economic recovery efforts. Therefore, bold steps are needed to defuse this time bomb.
An out of control deficit, a compromised economic future
The specter of a public deficit of 5.6% of GDP in 2024 looms large, a worrying figure with potentially disastrous consequences. According to the strict Maastricht criteria governing the euro zone, such a level would constitute an excessive deficit threatening economic stability. France would thus cross a red line by dangerously deviating from the 3% limit set by the European treaties. This drift would seriously compromise its credibility and its voice within the Union, where countries must absolutely respect common budgetary discipline.
Furthermore, this galloping deficit trajectory now seems unsustainable and calls into question the firm commitments made by President Macron. Determined to restore public finances, he had nevertheless unambiguously committed to bringing the deficit below 3% before 2027, a reassuring promise for the electorate. However, soaring global inflation and the economic shock of the war in Ukraine derailed these initial ambitions. Faced with the dazzling deterioration of the macroeconomic context, the objective of a rapid return below 3% today seems unattainable, threatening the presidential speech.
Deep roots, a complex solution
The root causes of this fiscal crisis go back decades. On the one hand, the subprime crisis in 2007 caused the deficit to explode to 7%. On the other hand, the Yellow Vest movement in 2018 also increased the deficits. Then, the Covid-19 pandemic in 2020 dealt a near-fatal blow to public finances. The deficit then approached 9%, a historic level. However, these successive crises cannot excuse current inaction. On the contrary, they underline the urgency of a global and ambitious economic strategy.
Despite these major crises, President Macron committed to redressing the situation during his second term, by bringing back the deficit below 3% by 2027 as required by European rules. But galloping inflation and the war in Ukraine have derailed these ambitions to restore public accounts. These repeated shocks now underline the urgency of a real overall economic strategy to sustainably clean up state finances.
It is high time to confront this worrying economic reality. Of course, the task will be difficult, but inaction would have catastrophic consequences. Therefore, policymakers must demonstrate courage and vision. Only a global approach, combining structural reforms and rigorous budgetary management, will make it possible to defuse this economic time bomb. The future of France depends on it.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
