From the first motion of censure, Michel Barnier fully entered into his first major political fight: the treatment of general budgets. The French Prime Minister officially announced this Thursday the content of the finance bill. It will now be debated in the National Assembly, where his party is in the minority. A decisive test for the new head of the Executive, especially in a context of growing public debt and deficit.
“The real sword of Damocles is not the one that hangs over my government, but the one that hangs over the French: the budgetary debt,” Barnier said last week in his general policy speech. Earlier this year, signs began to emerge that public accounts figures in 2024 would fall far short of the government’s forecasts. Élisabeth Borne’s executive had set itself the objective of reducing the public deficit to 4.4% of GDP, whereas in recent months estimates had suggested that it would reach 6.1%.
As for the public debt, it reached 3,200 billion euros at the end of June, or 1,000 billion more than in 2017, when Emmanuel Macron became president. In recent weeks, Barnier had already announced his desire to present a budget which aims to achieve 60 billion euros in savings, two thirds of which will come from cuts in public spending and the rest from the increase in “specific and limited in time” on large fortunes and multinationals.
It remains to be clarified what the distribution of the 40 billion euros of savings in public spending will be. It is suggested that a large part – about a third – will come from Social Security and another from the cancellation of various state credits. In addition, the statements of some ministers give some clues about the sectors on which the scissors will rest, such as the cases of Justice and Science, which assume that their budget will be reduced.
Taxes on multinationals and the rich
The new French government’s main tax proposal is an increase in corporate tax, which Macron reduced to 25% in 2017 on company profits. The new Executive wants to reduce it to 33.5%, an “exceptional” contribution which could bring 8 billion euros to public coffers in 2025. The government has stressed that this is an effort limited in time and that it will only affect beneficiary companies. . exceeding 1,000 million euros.
In addition to large multinationals, the budgets provide for an “exceptional contribution” from “the most fortunate” citizens to put France back on the path to reducing the public deficit to less than 5% in 2025 and 3% of GDP in 2029. The new Minister of the Economy, Antoine Armand, declared this week that this tax increase only concerned the 0.3% of the richest, or around 65,000 households.
Other tax measures were presented in general terms, without going into detail. This is the case of a partial increase in certain taxes on electricity and additional taxes on the purchase of the most polluting vehicles, either because of their weight or the type of fuel used. There would also be a case for toughening taxation on Airbnb-type vacation rentals.
Criticism among allies
This tax increase is one of the most sensitive points of the budgetary discussions that Michel Barnier is leading with the rest of the parties. And she was particularly criticized by the leaders of the center-right coalition, former members of the Government, such as Gabriel Attal and Gérald Darmanin. For the two Macronists, the increase in taxes on businesses represents a step backwards in the policy of “stimulating supply” initiated seven years ago by Macron and goes, according to them, against efforts aimed at to increase the capacity to attract investors in the French economy.
Paradoxically, just a few days ago, Emmanuel Macron himself spoke out in favor of “exceptional taxation” on large companies “for a year” during a public intervention during an official trip to Berlin .
In any case, former Prime Minister Gabriel Attal, current president of the Ensemble pour la République group (party founded by Macron), presented Wednesday at a press conference an alternative budget to that of Michel Barnier which, according to him, “does not contain enough reforms and yes, too many taxes. Attal instead advocates a reform of the unemployment compensation system.
The French government is also considering freezing the indexation of pensions for six months (to adjust them to the CPI) in order to achieve additional savings of 4 billion euros. A measure which has created unrest within Barnier’s party, even if for the moment the desire to close ranks with the Executive prevails in public declarations.
Parliamentary debate
However, the parties on which the government coalition relies seem to agree on one point: the need to use article 49.3 of the Constitution to approve budgets if necessary. Presented this Thursday before the Council of Ministers, the bill is transmitted to the Assembly where deputies can debate it until December 21.
Rarely has the development of the Finance bill, a highly codified and regulated process in French legislation, been destabilized by the political context as this year. Particularly for the 50 days which passed between Attal’s resignation and Macron’s appointment of his successor. For the first time, the legislative timetable assigned to the bill was impossible to respect and the budget prepared by the new Executive will arrive late at the National Assembly.
Even if the government says it is open to dialogue with parliamentarians, the Assembly remains divided into three blocs reluctant to make concessions. Consequently, the budget could be approved without a vote, in accordance with Article 49.3. In this case, the government does not need the approval of the Assembly, which can only block the law with a possible motion of censure, in which the votes of the far right would once again be decisive as they were there last Tuesday to save Barnier. .
“For the moment, Michel Barnier is not sending us any positive signal to prevent us from voting for a motion of censure after the re-examination of the budget,” said MP Sébastien Chenu, spokesperson for Marine Le Pen’s party, on Wednesday. “There are red lines that are not respected, including those that force the French to make additional efforts to pay for the damage caused by the economic policies applied in recent years.”
The left
For their part, the progressive parties of the New Popular Front (NFP) stressed to the Prime Minister that the measures on taxation of the most privileged do not go far enough and are proposing additional efforts such as the establishment of a tax “on more favored.” climatic fortune. » for assets exceeding one million euros. Several French media, however, suggest that the NFP abandoned the initial idea of preparing an alternative budget, as Gabriel Attal did, due to internal differences, notably on possible measures to reduce public spending.
Several important members of the Socialist Party, however, underlined their satisfaction with the first tax measures mentioned by Michel Barnier. Among them, the president of the Occitanie region, Carole Delga and the head of the socialist list in the last European elections, Raphaël Glucksmann. “They’re a foot in the door [de la fiscalidad más justa] that Macron had closed with three keys,” the MEP said this week.
On the other hand, in recent days, certain French media have suggested that the figure put forward by Barnier does not correspond to the reality of needs. A document sent by the Government to the High Council of Public Finances, revealed by the site Context, suggests that in reality the adjustment could be less than the 60,000 euros announced and that it will be based equally between taxation and reductions.
