The European Commission published Friday, November 15, public deficit forecasts for France until 2026 that were higher than those communicated by Paris, highlighting the negative impact of budgetary savings on economic growth. Brussels is counting on a French public deficit of 6.2% of gross domestic product (GDP) this year, then 5.3% in 2025 and 5.4% in 2026. The Minister of the Economy Antoine Armand had presented it with a medium-term budget plan which forecasts a deficit of 6.1% of GDP in 2024, then 5% in 2025 and 4.6% in 2026.
Asked about the divergence between the two trajectories, during a press conference, the European Commissioner for the Economy Paolo Gentiloni, admitted that there was a “small gap” of 0.3 points in the forecasts for the next year. “The reason for this difference lies in our assessment of a greater impact of the measures taken to reduce the level of the deficit,” he said, suggesting that the savings measures would reduce growth and consequently revenues. tax. “But of course, we understand and fully support this approach” of budgetary consolidation, he stressed. He also explained the forecast gap by a less favorable estimate from the Commission on “the cost of interest rates” of the French debt.
Risk of financial sanctions
The European Commission is due to present on November 26 its assessment of the medium-term budgetary plans of the countries of the European Union. Since the end of July, France has been the subject of a European procedure for excessive deficit, like six other member states.
Last year, these countries exceeded the public deficit limit set at 3% of gross domestic product (GDP) by the Stability Pact, which also limits debt to 60% of GDP. They must take corrective measures to comply with EU budgetary rules in the future, or face financial sanctions.
The public deficit for the entire euro zone should fall to 3% this year, according to forecasts from the Commission, which expects 2.9% in 2025 and 2.8% in 2026 for the bloc of 20 countries sharing the single currency.