by Leigh Thomas

PARIS (Reuters) – The budgetary savings announced by the French government should multiply at a time when the Minister of the Economy, Bruno Le Maire, continues to launch calls to control the public deficit.

Bruno Le Maire, announced Wednesday that the public deficit for the year 2023 should be “significantly beyond” the objective set by the government at 4.9%, due to the loss of tax revenue. last year.

In February, the minister announced 10 billion euros in savings on state spending in 2024 and rejected the idea of ​​a tax increase.

“For many, for a long time, public spending has been the solution to all our problems. Public spending now risks becoming the problem for us all,” declared Bruno Le Maire, heard on Wednesday by the finance committee of the National Assembly.

“We must take the necessary decisions to restore our public accounts again,” he added.

The French government has lowered the growth forecast for the French economy from 1.4% to 1% for 2024.

“There are two hypotheses. Either actually revise the trajectory that was envisaged in terms of deficit, or announce additional savings. Bruno Le Maire has started to send the message that new savings will be found,” Charles told Reuters -Henri Colombier from the Rexecode think tank.

DELICATE CALENDAR

Before the Finance Committee of the National Assembly, Bruno Le Maire recalled the objectives: to return the public deficit below 3% in 2027 and to achieve balance in 2032.

The timing of the next announcements will be delicate for the government which must communicate its annual deficit reduction plan to its European partners next month and while the rating agencies must update their ratings in April and May.

At the same time, the government will have to deal with the European elections which will take place from June 6 to 9, while Jordan Bardella’s National Rally (RN) is leading the way in the polls.

The leader of the RN, Marine Le Pen, criticized the government last week in Les Echos, pointing out the lack of efforts to reduce public spending and calling for efforts to be concentrated on immigration and social benefit fraud.

But the government will also have to avoid a downgrade of its rating by the agencies, notably S&P, which last December maintained France’s credit rating at “AA/A-1+”, accompanied by a negative outlook, and which must update its note on May 31, a few days before the European election.

“The latest announcements make the deterioration of the rating more and more credible,” declared Charles-Henri Colombier.

The first budgetary savings concerned in particular expenditure ranging from territorial cohesion and public aid to the housing renovation assistance system “Ma bonus Renov”.

In addition to the 10 billion euros in savings announced by Bruno Le Maire, the French government could face other expenses intended for farmers and the war in Ukraine, according to François Ecalle, former magistrate of the Court of Auditors, who runs a website on public finances.

This could make it necessary to adopt a supplementary finance bill for 2024 in the middle of the year.

The government is still seeking to make 20 billion euros in savings for its 2025 budget, Thomas Cazenave announced in the Finance Committee on Wednesday, compared to the 12 billion initially envisaged so far.

The next budgetary savings could concern the budgets of local authorities and social expenditure which have so far been spared.

Bruno Le Maire pleads for a takeover of unemployment insurance by the State.

“We must get out of this French exception which makes us incapable of reducing our public spending,” he said in the Finance Committee.

(Reporting by Leigh Thomas; Zhifan Liu, editing by Tangi Salaün)

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