Economy Minister Bruno Le Maire presented the government’s 2023-2027 debt reduction targets, aiming to lower them by four percentage points after years of extensive spending, but the opposition warns this marks the start of austerity in Europe.
The ‘whatever it takes’ spending policy President Emmanuel Macron championed during the COVID-19 pandemic is over.
Le Maire presented the “debt stability programme” for the 2023-2027 period on Thursday, arguing he would be “firm” on “speeding up” debt reduction. The government spent €240 billion – about 10% of the country’s GDP – to fight off the effects of the pandemic and, after the start of Russia’s war in Ukraine, spent a total of €24 million on inflation-relieving measures for 2022.
“We’ve had the lowest level of inflation in the Eurozone in the past two years”, standing at 5.2% in 2022, Le Maire told journalists.
However, Le Maire said he now wanted to “accelerate France’s debt reduction”, aiming for a four percentage point reduction by 2027, from 111.6% of GDP to 108.3%.
Similarly, deficit levels ought to be brought back to 2.9% of GDP by 2027 – that is, under the 3% bar set out in the Growth and Stability Pact, the EU’s reference guide for budget policy, which is currently undergoing a major review.
This quickened reduction is justified by the need to regain “leeway” to be better prepared to face new potential economic shocks, Le Maire added.
This move is all the more urgent as interest paid on debt is, quite literally, exploding, expected to go from a current €46.3 billion to €71.2 billion in 2027, following a series of interest rates hikes by the European Central Bank (ECB).
“At a time when we have just asked French people to make an effort by working longer”, the State must also play its part in cutting spending down, Le Maire explained. Consequentially, the share of public spending is expected to fall from 57.5% of GDP to 53.5% over the next four years.
This could signal that France might be going through a new period of austerity, the socialist MP Christine Pirès-Beaune tweeted.
Manon Aubry, a radical-left MEP and chair of the Left group in the European Parliament, also warned that the government’s plan was the “start of austerity cuts” in the name of a “sacred” budget stability.
Back in January, at the height of the protests against the pensions reform, Esther Lynch, general secretary of the European Trade Union Confederation (ETUC), told EURACTIV France a “new wave of austerity” was sweeping across Europe as debt rates soared during the pandemic.
“Austerity measures make no sense at a time when the inflationary crisis is devastating to households across Europe”, she added.
(Theo Bourgery-Gonse | EURACTIV.fr)
Source: euractiv.com
