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France’s departing finance minister Bruno Le Maire has urged the country’s next government to pursue deficit-reducing measures after public spending and debt soared under his tenure.
Le Maire on Thursday got ahead of his impending exit after inconclusive legislative elections over the summer, and defended his seven years marshalling reforms and as the face of President Emmanuel Macron’s economic policy in a valedictory speech.
Macron last week appointed the EU’s former Brexit negotiator Michel Barnier as prime minister. Barnier is expected to name his new cabinet next week in what will be one of the biggest upheavals on key portfolios for years — and a likely rupture with the reformist early years of the Macron era, given that passing bills in a fragmented parliament will be tortuous.
Le Maire said his successor should make the necessary spending cuts to steer the deficit and ballooning public debt back on track, after smaller than expected tax revenues this year and last created embarrassing slippages and prompted Brussels to start a sanctions procedure against Paris.
Last week a treasury estimate revealed France’s deficit may reach 5.6 per cent in 2024 instead of the projected 5.1 per cent of GDP, spelling painful cuts ahead if the country is ever to reach its goal of coming within EU limits of 3 per cent by 2027.
“Did we spend a lot? Yes, but for the good of everyone,” Le Maire told ministry staff in his send-off. He argued that France’s big stimulus package had been necessary to help the economy recover from the Covid-19 pandemic, and defended help for households during a European energy crisis in 2022.
“It’s too easy to rewrite history: we did not waste public money, we protected the French,” he said.
Le Maire said that “France should not go backwards” and “keep with the target of bringing the deficit under 3 per cent in 2027”, describing those who call for more spending as “sleepwalking”.
He also defended his attempts to bring in more windfall taxes on energy companies in a budget amendment this spring that never came to fruition due to the fractious political climate.
Economists have suggested the current deficit targets will be extremely hard to meet on deadline. On Sunday Pierre Moscovici, head of the national audit body, said the trajectory had become “unrealistic and not necessarily desirable” as it would entail finding €100bn of budget cuts in three years.
“Brussels will always prefer the truth,” Moscovici told Le Parisien newspaper, saying a 3 per cent target by 2029 and not 2027 might be more realistic.
Barnier, who hails from conservative ranks, will now form a government that will be inherently unstable, with no majority support in a divided parliament.
That will make budget talks for 2025 — due to start in October — especially hard, as parties with clashing economic policies include a left-wing bloc opposed to big spending cuts. The left and the far-right of Marine Le Pen have also advocated going back on one of Macron’s most unpopular reforms, a rise in the retirement age from 62 to 64.
The deteriorating public finances became a blot on Le Maire’s time in office, during which unemployment rates fell to multi-decade lows of 7.1 per cent at one point in early 2023. The country’s reformist stance has lured foreign investors and begun to deliver a turnaround on the industrial front, with factory openings outpacing closures last year.
Le Maire, a prolific writer who has published several books since 2017, including a racy novel last year that raised eyebrows for its erotic passages, has had talks about teaching jobs including with the Swiss university of Lausanne.
He is seen as having had political ambitions including to run as French president, although on Thursday he signalled he would take a break from politics.
“It’s time for me to breathe a different air,” Le Maire said.