The reality had to be officially admitted one day. Michel Barnier took care of it, Tuesday 1Ahem October, in its general policy statement: the cardinal commitment assumed by France to reduce its public deficit to less than 3% of gross domestic product (GDP) in 2027 will not be met. The horizon shifts two years. “Our goal is to return our country to the right trajectory to return below the 3% ceiling in 2029.” declared the Prime Minister before the deputies. To achieve this, he plans a sharp reduction in public spending, but also “exceptional contributions” aim “the luckiest” and large groups. A clear turn in the economic policy followed for seven years.
Hearing it, the ears of Emmanuel Macron and Bruno Le Maire must have whistled. During his farewell to Bercy on September 12, the former Minister of Economy urged the future government not to abandon the 3% target for 2027 set by the President of the Republic. “ It is totally within our reach.” he assured. Michel Barnier did not follow him. Like almost all economists and experts, Matignon’s new tenant considered it politically and socially impossible to reduce the deficit in such a brutal way, given the current slide in public accounts.
Although he avoided direct attacks, the Prime Minister did not hide the magnitude of the mess left by the previous government. The deficit of the State, local administrations and Social Security? Far from falling as expected, it should fall this year “exceed 6%” of GDP, and “it would be even greater” in 2025 “if nothing were done.” The debt needed to cover this deficit? “Colossal”, said Michel Barnier. With an amount of 3,228 million euros at the end of June, “will place our country on the edge of the precipice,” at least “if we are not careful.”
90 billion euros to find
“The true sword of Damocles is there, over the head of France and all French people,” he insisted, emphasizing how much “These figures have nothing to do with the forecasts at the beginning of the year or with the trajectory promised to our partners.” This drift “weakens” France’s position in Europe and hinders the action of the State, he pointed out: the debt burden already constitutes the second budget of the State, behind education, and the risks weigh once again.
Otherwise, the calculation is quite simple on paper: reducing the deficit from more than 6% to 3% of GDP requires finding at least 90 billion euros without inflation, reducing spending or increasing income. Or do both at the same time. Michel Barnier wants an important part of this plan to be applied between now and 2025, reducing the public deficit to 5% of GDP. This is less ambitious than the target of 4.1% of GDP set so far for 2025. However, this represents an adjustment of around 30 billion euros in a year, 35 billion perhaps if the deficit increases to 6, 2% or 6.3% of GDP in 2024 as something scary.
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