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French Finance Minister Antoine Armand said the government will present a budget this week that respects European Union rules as he seeks to reassure partners in the bloc and markets over the country’s runaway deficit.
Armand is due to present the newly appointed administration’s policy priorities at a meeting of euro-area finance chiefs in Luxembourg later on Monday, as is customary when governments change.
“It’s a budget that will be fully in line with new European fiscal rules that France contributed to,” Armand said in a telephone briefing with journalists.
France’s finances are in the spotlight after the government announced a series of slippages in plans to bring the budget deficit back within the European limit of 3% of economic output.
France delays plan to meet 3% EU deficit limit until 2029
The current government, which was appointed last month after snap elections in July, has said it will now meet the target by 2029, instead of 2027 as the previous administration planned. As a first step, it plans €60 billion of spending cuts and tax increases next year to bring the gap to 5% of economic output from around 6.1% in 2024.
The budget plans are a first test of new European rules on how to meet fiscal targets that were designed to tailor adjustments to individual countries. Member states can get extra time to rein in deficits if they present longer-term reforms.
“We haven’t done the budget for the EU rules, we have done the budget to strengthen the financial and national sovereignty of the country,” Armand said. “But it turns out that respecting the commitments we ourselves formulated and inspired is a question of international credibility and sovereignty.”