Brussels (Brussels Morning Newspaper) – Today, on January 21, 2025, the European Council adopted recommendations for seven countries, including France, to fix their excessive deficit situation within a set period.
The proposals contain a corrective budgetary course, described in numerical terms, and a deadline for each member nation.
According to the statement,
The Council recommendation establishes that France should put an end to the excessive deficit situation by 2029. France should ensure that the nominal growth rate of net expenditure does not exceed 0.8% in 2025, 1.2% in 2026, 1.2% in 2027, 1.2% in 2028 and 1.1% in 2029.
Overall, France maintains a level of ambition over a seven-year period, albeit in a less frontloaded way,
EU Economics Commissioner Valdis Dombrovskis told reporters of the strategies to lower the deficit, pulling a comparison with proposals offered by the Barnier government last year.
How does France’s economic forecast affect its recovery plan?
Presently, France is experiencing some serious economic difficulties, especially since the country finds itself in a tough situation: a mixture of political instability, fiscal tensions, and not very bright prospects for growth. The public deficit is forecast to stay relatively high at 5-6.2% of GDP by 2025. Public debt is growing; the forecast predicts its increase up to around 117% of GDP by 2026.
Recent political unrest, which sent the prime minister, Michel Barnier, packing and replaced him with François Bayrou, has left budget negotiations hanging in the balance for next year, 2025. France operates on provisional budgets today since no new budget has been passed due to the ongoing political crisis.
The French government proposed a draft budget that includes heavy cost-cutting measures amounting to €50 billion. With inflation rates predicted to stabilize at below 2%, there are concerns about household purchasing power because of the expected labor market contractions in 2025.
