The French government has requested more time from the European Commission to present its plans for debt reduction and deficit reduction. This comes as Michel Barnier, the new prime minister, works to form a government in a context of worsening finances.
The finance ministry of the country said that it had requested more time from Brussels for preparing the plans. They are due on September 20, according to the ministry. France will probably submit them along with the draft budget for 2025, which is due in mid-October.
France, like other members states during this transition year to the new European Budgetary Rules, has requested an extension from the Commission. The goal is to maintain consistency between the plan, and the [France] draft finance laws for 2025,” said the Finance Ministry on Sunday.
Last week, the outgoing finance Minister Bruno Le Maire warned of a higher public deficit than expected for this year. It is estimated to be at least 5,6% of gross domestic products.
In a letter sent to MPs, he said that the main risk was linked to a rapid increase in local authority spending. This alone could have an impact on 2024 accounts of €16bn in comparison to the stability program for 2024-27.
The first major hurdle for Barnier will be to pass the country’s budget 2025, which is due to be debated in parliament at the beginning of October. This step promises to be contentious, especially with a divided parliament that’s sharply ideologically divided.
Barnier, a veteran conservative politician who was also a former Brexit negotiator in the EU will have to put his experience as a dealmaker to the test when he attempts to form a stable government within a highly fragmented political environment.
The EU’s fiscal rules, which limit spending to 3% of GDP, were suspended during this pandemic. They have now been reinstated but with new conditions and clauses.
France is one out of seven EU members facing an excessive debt procedure. The commission launched the procedure in June. It was a reprimand because it violated bloc rules which limit borrowings to 3% of GDP.
In the fall, after EU countries submit their multiannual plans to be reviewed, the commission will provide instructions on how to reduce expenditures. France has yet to form a new government two months after snap election results resulted in a divided Parliament.
Barnier said on Friday that he didn’t want to increase the debt of the country in his first interview after being appointed as PM by Macron this week . Barnier is facing pressure from different political groups to adjust his spending plans in order to keep his government intact.
“The country cannot afford to spend recklessly in certain areas.” In an interview with La Tribune Dimanche, Marine Le Pen, leader the Rassemblement National (a far-right party that came in second place in the July elections), said, “I am thinking about immigration, but I also think of fraud.”
If the coalition is going to last, the prime minister will need the support of his Les Republicains Party, other conservatives, and groups on the center-left, as well the tacit agreement from the RN to not vote against him.
Pierre Moscovici told Le Parisien that the next budget would be “undoubtedly the most delicate” of the Fifth Republic. “We must absolutely control our debt.” . . If this trend continues, we will be a long way from our European partners and our commitments.”
Un spokesperson for the commission said: “The rules allow the submission of the plan beyond September 20.” The commission can extend the deadline for a reasonable time with the agreement of member states. At this point, we cannot confirm whether [France] has made a request.”
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.