The French Council of Ministers on Thursday approved the draft 2025 Finance Law (PLF), which, if approved by deputies in the National Assembly, would include an unprecedented €60 billion budgetary measure, with €40 billion in cuts and €20 billion in additional revenues.
Economy Minister Antoine Armand was clear that a “colossal debt”—almost €3.3 trillion, or 113% of GDP-is burdening the country’s finances, while the public deficit is expected to exceed 6% in 2024.
“We must make courageous choices now to avoid painful ones later,” added French Budget Minister Laurent Saint-Martin.
“I have only one [red line], which is to straighten out the public accounts. That will be my sole compass,” Saint-Martin said.
The state will bear the spending cuts aimed at reducing the public deficit to 5% of GDP by 2025 and 3% by 2029. A €21.5 billion cut in state expenditures will be combined with €5 billion in savings required from local authorities and a €15 billion squeeze in social protection spending.
Notable exceptions include the budgets of the ministries of defence, interior, and justice, which are all expected to be preserved.
In line with the 2024-2030 military programming law, the defence budget is expected to increase from €47.23 billion in 2024 to €50.5 billion in 2025, while the justice budget will remain stable at around €10 billion.
The Interior Ministry’s “security” mission, which aims to “prevent and fight terrorism and radicalisation” and to combat “all forms of delinquency,” will also see a slight increase in funding, from €16.70 billion to €17.29 billion.
Contributions to the EU are also expected to rise from €21.6 billion to €23.3 billion.
On the revenue side, the government plans to rely on a “temporary and exceptional” contribution from large companies with an annual turnover of €1 billion or more and households with a total yearly income of more than €500,000.
“Even though the fiscal tool is necessary in the short term to restore our public accounts, to remain credible with our European partners, and to preserve our social model, we maintain our doctrine by continuing a supply-side policy and firmly supporting economic activity,” Armand said.
It remains to be seen whether Barnier’s 2025 finance bill will be welcomed by lawmakers, as the text will be scrutinised by the Parliament’s Finance Committee starting from Wednesday before reaching the plenary Assembly on 21 October.
The opposition is expected to reject the draft law, but Barnier could also face criticism from some MPs in President Emmanuel Macron’s Ensemble pour la République (EPR) party after former prime minister Gabriel Attal admitted on Wednesday that there were “some disagreements” on how to reduce public deficits.
“The concern we have already expressed is that the budget that seems to be taking shape does not include enough reforms and relies too heavily on taxes, with the risk of destabilising our industries and the working middle class,” Attal said.
(Laurent Geslin | Euractiv.fr)
Source: euractiv.com
