With the deficit and debt values far exceeding what is expected in European treaties, the French government is preparing for cuts of about 28 billion euros over the next two years to achieve an approximation of the goals set by Brussels.
Next year, the executive led by Elisabeth Bourne expects to save about 16 billion euros and in 2025 another 12 billion euros will be added. For this year, Paris expects a deficit of 4.9% of GDP, next year it will be 4.4%, in 2025 it will be 3.7% of output, and only in 2027 it will be below the 3% limit.
The Minister responsible for the budget, Thomas Casnavi, said: “We confirm the spending reduction targets of 16 billion euros for the 2024 budget, and we are already preparing to save 12 billion euros for the 2025 budget,” adding that the government still intends to reduce them. The deficit will reach 4.4% of GDP in 2024 and 3.7% in 2025.
As for public debt, government projections indicate 109.7% of GDP this year and next, making it higher than Portugal, for example.
The interview with government officials comes on the eve of the publication by rating agency Standard & Poor’s of its assessment of France’s financial rating, scheduled for December 1. In the latest evaluation, Standard & Poor’s maintained its rating at AA, with a negative outlook. These Paris efforts will be an attempt to convince the markets and the rating agency to improve or even maintain the rating.
To reach the expected savings values, Thomas Casnavi indicated, in an interview with the French newspaper La Tribune Dimanche, which plans to free up space occupied by state services, may end up selling real estate. According to Cazenave, the goal is to reduce the number of offices occupied by the public administration by a quarter.
“There is a real savings drive, especially with new ways of working,” the official said, referring to the increase in remote working after the Covid-19 pandemic. According to Casinavi, the ratio of office space per public employee is 24 square metres, which is much higher than the standards of private companies, and the government wants to reduce this number to 16 square metres. “We can also think about real estate sales,” he added in the interview published on Sunday.
Asked whether the government would be able to achieve its goal of reducing the unemployment rate from 7% to 5% by 2027, Finance Minister Bruno Le Maire said this would require a review of social policies, especially unemployment benefits.
“We worked hard to move from 9% to 7%, but to move to 5%, we need to make brave choices… All policies that fuel unemployment among the elderly must be reconsidered,” Le Maire said.
“We confirm the spending reduction targets of 16 billion euros for the 2024 budget, and we are already preparing 12 billion euros in savings for the 2025 budget,” he announced, adding that the government still intends to reduce the deficit to 4.4% of GDP. in 2024 and 3.7% in 2025.
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