The public finances may be falling, but France can still meet its deficit targets, provided firm decisions are taken quickly. This was the message that the outgoing Minister of Economy and Finance, Bruno Le Maire, wanted to convey on Monday 9 September during his hearing before the deputies of the Finance Committee before leaving Bercy to go teach in Lausanne, Switzerland.
A strong speech addressed to parliamentarians, but especially to the new Prime Minister, Michel Barnier, and his future government. A kind of political testament. According to Bruno Le Maire, it is essential not to abandon the supply-side policy, favourable to businesses, and to finally tackle public spending. “The rest is perlimpinpin dust.” -he said.
Achieving goals? Reducing the public deficit from 5.5% of gross domestic product (GDP) in 2023 to 5.1% in 2024 and then to less than 3% in 2027, as promised by President Emmanuel Macron. Apart from Bruno Le Maire, very few people believe that such a mission is still possible. The rating agencies have regretted this prospect, especially after the minister himself announced on 2 September that there were unpleasant surprises in the execution of the budget. If nothing is done, they risk, on the contrary, leading to an increase in the deficit, which would reach 5.6% this year.
Faced with more than sceptical MPs who accused him of lying, cheating and even stealing, Le Maire stood firm in his boots. “The difficulties are not insurmountable, he assured. We must maintain our deficit of 5.1% in 2024 and 3% in 2027. It is within our reach. »
How to achieve this? In the short term, the solution recommended by the suspended minister boils down to three points. First, actually cancel part of the 16.5 billion euros in credits frozen for several months on paper. Then, quickly convene the High Council of Public Finances to encourage local authorities to reduce their spending, which has increased considerably since the beginning of the year. Finally, tax energy companies more and buy back shares, presenting Parliament with a corrective budget for 2024: Bruno Le Maire proposed this in April, but, with the European elections approaching, Emmanuel Macron did not want it.
Hearing, Bruno Le Maire barely convinced the deputies
I am not sure that these three measures will be enough to bring the budget deficit back to the level planned from 2024 onwards. But Bruno Le Maire has been particularly clear about the future. According to him, now that the Covid-19 and inflation crises seem to have passed, the main thing is to stop the economic support measures implemented at that time and cut public spending. “The state budget has increased by 100 billion euros since 2019, he pointed out. “So maybe we can save 10, 15 or 20 billion to find a more reasonable path.” and address potential future crises.
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