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France's state budget deficit could exceed 5% of GDP in 2024

French government struggles with deficit

The French government, as expected, announced new forecasts, according to which the state budget deficit, reached 5% of GDP in 2024, compared to the expected 4.4%.

In the upcoming annual stability program presented in Brussels, the projected government budget deficit for this year will be perhaps even 5.1% of GDP. This is a significant deviation to 5.5% from the previously projected 4.9% in 2023, mainly due to lower than expected revenues.

Last week, Jean-René Cazeneuve, rapporteur for the general budget of the French National Assembly, expressed skepticism about reaching the 4.4% target in 2024, suggesting it was unlikely.

In response, Economy Minister Bruno Le Maire announced urgent remedial measures, proposing to save ten billion euros in the state budget this year, the maximum amount possible without parliamentary approval.

However, according to Les Echos, Minister Le Maire has proposed to consider a law to rectify the financial situation, which has drawn disapproval from President Emmanuel Macron and Prime Minister Gabriel Attal, who reportedly have different opinions on the matter.

Given the lack of more substantial austerity measures beyond the proposed ten billion euros, it can be assumed that the deficit will be minimally reduced this year, especially with the economy projected to grow by only 1%.

To achieve the significant deficit reduction prescribed by the EU to 3% of GDP by 2027, the government will have to rely on strong growth in 2025 and 2026. In the latest stability program, Bercy forecasts growth of 1.7% in both years and 1.8% in 2027.

Last week, Bruno Le Maire expressed optimism about the economic outlook for 2025 and 2026, hinting at a possible upward revision of growth forecasts in the stability program during a meeting with entrepreneurs.

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