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France’s deficit could be much higher than expected if more cuts are not made, the finance ministry warned lawmakers, pointing to a shortfall in tax revenue and an increase in local spending.
In an update on the budget sent to lawmakers Monday night, the finance ministry said that the public sector budget deficit could reach 5.6 percent of GDP this year, higher than the 5.1 percent targeted.
The head of the National Assembly’s finance committee, Eric Coquerel, a lawmaker with the hard left France Unbowed, said that the deficit could reach 6.2 percent in 2025, according to treasury calculations.
Income tax, as well as corporate and value added taxes brought in less revenue than expected, while snap elections this summer as well as increased security in New Caledonia added expenses, Coquerel said on X, citing the letter from the ministry.
In the letter, Finance Minister Bruno Le Maire warned of the “extremely rapid increase in local public spending”, which added 16 billion euros to the books compared to previsions sent in the spring.
The deterioration of France’s finances has sparked disciplinary proceedings from the European Union, whose rules require budget deficits to not exceed 3 percent of GDP.
This is putting even more pressure on President Emmanuel Macron, who has yet to appoint a new Prime Minister after July’s snap elections that left the National Assembly with no clear majority.
The outgoing government is preparing a budget for 2025 that is based strictly on spending from 2024, and is “reversible”, according to the finance ministry, to be revised by a future government when it is finally formed.
(with newswires)